Asian markets buckled badly on Thursday after the Federal Reserve heralded an eventual end to free money and China turned the screw on credit even as factory activity in the world's second-largest economy hit a nine-month low.
Shares, currencies and commodities all crumbled as spooked investors rushed to unwind crowded trades in emerging markets. Central banks across the region were busy intervening trying to put out spot fires, but with only limited success.
Among a host of unwanted milestones: Asian stocks outside Japan suffered their biggest daily loss since late 2011, key lending rates in China reached historic highs and India's currency carved out a record low.
MSCI's broadest index of Asia-Pacific shares outside Japan sank 3.5%, its biggest one-day percentage drop since November 2011.
Australia's bourse lost 2.1% while South Korean shares shed 2% to seven-month lows. Stocks in Hong Kong were down 2.7% while Shanghai closed 2.8% lower.
Japan's Nikkei stock average was off 1.7%, a relatively modest move given its recent wild swings.
BLAMING BEN
The initial catalyst for the carnage was Fed Chairman Ben Bernanke who pulled few punches when signalling a likely end to asset buying by the middle of 2014.
That sent 10-year U.S. Treasury yields spiralling to a 15-month peak of 2.38%, squeezing investors who had borrowed in U.S. dollars to invest in emerging markets.
"Bernanke was more explicit than markets had expected. Rising U.S. yields will spur broad dollar buying. The dollar's direction is now set," said Yuji Saito, director of foreign exchange at Credit Agricole in Tokyo.
He said the contrast between Fed's shrinking balance sheet and the Bank of Japan's rapidly expanding holdings would spark the dollar to resume its climb against the yen.
Indeed, the dollar was already up at 97.23 yen for a gain of 2% in as many sessions.
Adding to the pain, a closely-watched measure of Chinese manufacturing took a surprise spill and only added to evidence of tepid economic growth in the second quarter.
The "flash" HSBC China Purchasing Managers' Index contracted further to 48.3 in June, from May's final reading of 49.2, its weakest reading since September.
Hardly helping was a surge in interbank lending rates as the People's Bank of China (PBOC) tightened liquidity even as banks there clambered for cash.
The Australian dollar cratered at a three-year low of $0.9232, having shed three cents in little more than a day, reflecting China's importance as the resource-rich country's single biggest export market.
The Philippine peso lost 1.2% to 43.76 per dollar, the weakest since May 31 last year, while South Korea's won fell 1.4% to 1,146.6.
India's rupee hit an all-time low on the U.S. dollar, prompting intervention to stem the rot.
DEVELOPED OVER EMERGING
However, analysts believed developed markets would likely outperform emerging markets for the foreseeable future.
In a rare turn, Japan was one of the developed nations that seemed to be doing better.
The resource-poor nation is also set to benefit from lower global commodity prices. U.S. crude futures were down $1.73 a barrel at $96.51 a barrel while Brent fell $1.83 to $104.29.
U.S. gold futures for August delivery fell more than 2% to $1,346.00 an ounce in Asia on Thursday. Spot gold fared a shade better at $1,344.01 an ounce.
