Global markets slide after a tough day on Wall Street

Hong Kong(CNN Business) Asian markets mostly closed lower on Thursday and European indexes slid in early trade following a rough day on Wall Street.

Hong Kong's Hang Seng (HSI) tumbled 2.5%, leading losses in the region. Japan's Nikkei (N225) also dropped nearly 2%. China's Shanghai Composite Index (SHCOMP) fell as much as 1.4% before reversing in late trade to close 0.4% up.

In Europe, London's FTSE 100 (UKX) was down 2.4%, while Germany's DAX (DAX) and France's CAC40 (CAC40) both lost about 2% in early trade.

The US stock market suffered a steep sell-off on Wednesday, as investors grew increasingly worried about rising inflation and a possible recession. The Dow Jones Industrial Average (INDU) lost 3.6%, its worst trading day since June 2020. The S&P 500 (INX) sank 4%, and the Nasdaq Composite (COMP) skidded 4.7%.

Wall Street was poised to open lower Thursday, with stock futures trading between 1.3% and 1.6% lower.

A dire earnings report from US retail giant Target (CBDY) slammed broader market sentiment Wednesday. CEO Brian Cornell said shoppers were concerned about "the high and persistent inflation they've been experiencing, particularly in food and energy."

And elevated inflation readings from the United Kingdom and Canada were "a reminder for markets that the fight against inflation among central banks globally will be a challenging process," said Jun Rong Yeap, a market strategist for IG Group, on Thursday.

"An uptick in Covid-19 cases in China seems to dampen earlier hopes of a quick easing in overall virus restrictions, potentially contributing to the market risk aversion," he added.

The Chinese economy is likely to contract in the second quarter, as Covid lockdowns wreak havoc on activity. Consumer spending and factory output both shrank sharply last month, while unemployment surged to the highest level since the initial coronavirus outbreak in early 2020.

A top official in China tried once again on Thursday to lift the spirits of its huge tech industry. But markets were still deeply concerned about the growth prospects of the country's big internet companies.

Those concerns were reinforced Wednesday when Tencent (TCEHY) reported zero revenue growth in the first quarter, a worse outcome than expected. Shares of Tencent sank 6.5% in Hong Kong, marking its worst day in two months.

Alibaba (BABA) plunged 7.4%, while JD.com (JD) and Meituan both lost more than 3%.

"Despite recent assurances laid out by China authorities, the relief in China tech has proved to be short-lived thus far, as market participants await for more concrete policy follow-through in order to restore longer-term confidence," Yeap said.