The dollar was a tad lower at 105.86 yen in Asian trading Thursday.
Market benchmarks in Shanghai, Tokyo and Hong Kong all retreated.
Investors are on edge because the German economy shrank in the second quarter, and the US-China trade war still looms large over markets despite the latest truce. His comments came just days after he threatened to levy tariffs on about $300 billion of Chinese goods, extending existing tariffs.
RBA Deputy Governor Guy Debelle also highlighted the risks from the trade war in a speech earlier on Thursday, warning it could trigger a self-fulfilling global downturn.
"U.S. recession risks have increased from USA aggressive trade policies on China hurting the rest of the world", said Eugene Leow and Philip Wee of DBS Group in a report. In its latest projection, the USA investment bank lowered its fourth-quarter growth forecast by 0.2 percentage points to 1.8 percent.
Hong Kong's Hang Seng lost 0.1% to 25,271.23.
Australia's S&P-ASX 200 fell 2.8% to 6,408.10.
South Korean markets were closed for a holiday.
All of the 11 major sectors in the S&P 500 closed in negative territory, with energy, financials, materials, consumer discretionary and communications services all falling 3 percent or more.
The Australian dollar lifted to 67.8 U.S. cents, a moderate gain of 0.5 per cent.
Tech stocks and banks led the broad sell-off. The pound has been hemmed into a tight trading range recently due to lingering uncertainties about whether Britain will exit the European Union without transitional trading agreements. But each time, some market watchers cautioned not to make too much of it. Academics tend to pay the most attention to the spread between the three-month Treasury and the 10-year Treasury, which inverted in the spring.
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The S&P dropped 85.72 points, or 2.9%, to 2,840.60, while the Nasdaq fell 242.42, or 3%, to 7,773.94.
Traders tend to shift money to the safety of US government bonds when they're fearful of an economic slowdown. The inversion of the yield curve also affected the British debt market, which also further increased the pressure on its stocks.
Recessions could arrive within one or two years following the inverted yield curves, but some economists argue that the inverted yield curve may not necessarily mean recession is coming.
He also said the US Federal Reserve would have little choice but to "ease rates, thus keeping US Government bonds from rising materially". In the past, this so-called inversion of the USA yield curve has accurately predicted the past five recessions.
With the yield curve on the 2-year/10-year bond yields inverting for the first time since 2007 on Wednesday and the hashtag #TrumpRecession trending No. 1 nationally on Twitter, President Donald Trump took a shot at one of his favorite whipping boys: Federal Reserve Chair Jerome Powell.
Each of the last five times the two-year and 10-year Treasury yields have inverted, a recession has followed.
The local currency was boosted by stronger-than-expected job figures - which revealed 41,100 new jobs were created in July, with the unemployment rate steady at 5.2 per cent.
Worldwide benchmark Brent crude LCOc1 fell $1.50 to $57.98 a barrel. Both were hovering around 1.58% as of late Wednesday afternoon.
Oil prices plunged with Brent crude LCOc1 losing another 2% to $58.4 a barrel, after shedding 3% overnight. EURUSD slipped from 1.1200 to 1.1150 over the previous two days, while the stock markets have experienced a rather bumpy road.
The Japanese yen JPY= weakened 0.22% versus the greenback at 106.16 per dollar. The euro edged up to $1.1142 from $1.1138.