Asian equities slumped on Tuesday, pulled down by the risk of additional monetary policy tightening by central banks, China’s new COVID crisis, and Europe’s energy shortfall, leaving the euro only a whisker away from parity with the safe-haven dollar.

The MSCI Asia Pacific Index outside Japan sank 0.8% to its lowest level in two years, while Japan’s Nikkei fell 1.75%.

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The BSE Sensex in India fell over 250 points on Monday, echoing a bearish trend in global stock markets. In early trading, the Sensex slipped 269.37 points or 0.50% to 54,125.86. The NSE Nifty dropped 105.65 points or 0.65% to 16,110.35.

The euro sank as low as $1.0006 against the US dollar, approaching parity for the first time since December 2002, as investors fear an energy crisis may push the region into recession.

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The dollar index, which compares the value of the dollar to six other currencies, increased to 108.47, its highest level since October 2002.

This week’s attention will be on macro data, including the Consumer Price Index from the United States on Wednesday, as well as statements from Federal Reserve officials, as investors hunt for hints about the outcome of the Fed’s forthcoming policy meeting before officials undergo the pre-meet blackout period.

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A rising inflation number would put further pressure on the Fed to accelerate its already aggressive rate hikes.

Investors are also concerned about the fact that many Chinese cities, notably the commercial hub Shanghai, are implementing additional COVID-19 restrictions beginning this week to prevent new infections following the discovery of a highly transmissible Omicron subvariant.

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The rising cost of energy in Europe is a serious concern, especially now that the largest single pipeline bringing Russian natural gas to Germany has undergone yearly maintenance, with flows anticipated to halt for 10 days.

Investors are concerned that the shutdown would be extended due to war in Ukraine, severely limiting the European gas supply and sending the faltering eurozone economy into recession, according to Reuters.

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The 10-year Treasury note yield was 2.9668%, having fallen back below 3% overnight as investors sought safe haven in Treasuries after a Wall Street sell-off.

On Monday, the three major U.S. stock indices finished lower on investor fears about increasing prices and corporate earnings ahead of the start of the earnings season. International equities sank significantly, as did oil prices and bond yields.