Equities and oil prices tumbled on Wednesday after a brief respite from last week's painful rout across world markets, with recession fears building as central banks hike interest rates to combat decades-high inflation.

While Asia, Wall Street and Europe all enjoyed healthy gains on Tuesday, analysts warned the downbeat mood on trading floors means the selling is unlikely to end any time soon.

Federal Reserve boss Jerome Powell's two-day testimony to Congress this week will be pored over for an idea about officials' plans for fighting runaway prices, which are being fanned by supply chain snarls, China's lockdowns and the war in Ukraine.

Most observers expect the Fed to aggressively hike US interest rates several more times this year having recently carried out the sharpest lift in almost 30 years.

The prediction is handing support to the dollar, which pushed the yen briefly to a fresh 24-year low on Wednesday.

The Bank of Japan is holding back from lifting interest rates, in sharp contrast to other major central banks.

"Swiftly rising interest rates act as a vacuum for economic growth, and this isn't lost on the market today," noted Sophie Lund-Yates, equity analyst at Hargreaves Lansdown. 

"This is a darker day for global markets than has been seen in a while. Serious questions remain about the resilience of consumers, and it appears traders are bracing for a harsh hand where interest rates are concerned."

Serious questions remain about the resilience of consumers, and it appears traders are bracing for a harsh hand where interest rates are concerned- Sophie Lund-Yates, equity analyst at Hargreaves Lansdown

Oil prices were feeling the heat from recessionary fears, with both main contracts tanking more than five per cent at one point.

Crude and gas prices have soared in recent months after major economies lifted pandemic lockdowns and following the invasion of Ukraine by major energy producer Russia.

Surging energy costs are fuelling global inflation, with official data on Wednesday showing the British annual rate hitting a fresh 40-year high above nine per cent.

In the United States, President Joe Biden will on Wednesday ask Congress to suspend the federal gas tax for three months as skyrocketing prices cause widespread anger among Americans just months before crucial mid-term elections.

The White House wants to discontinue the 18 cents per gallon tax until September and will call on state governments to do the same.

A senior administration official noted that US gas prices -- averaging near $5 per gallon -- had jumped almost $2 since Russian President Vladimir Putin began building up forces on the Ukrainian border earlier this year.

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