Stocks and oil prices fell on Tuesday as the euro edged closer to parity with the U.S. dollar as markets gripped by fears of a global recession.

Europe’s Stoxx 600 equity index lost 0.6%, bringing it down about 15% this year. A broad MSCI index of Asian stocks hit a new low in two years. Futures markets signaled that Wall Street’s S&P 500 would fall 0.7% in early trading in New York.

Meanwhile, the euro was on course to hit $1 for the first time since 2002. The dollar index, which measures the U.S. currency against six others and has a heavy euro weighting, rose by 0.4% to remain at its highest level in two decades.

Brent, the oil benchmark, fell 4.8% to just over $102 a barrel.

Investors have been spooked by business and consumer surveys that point to an impending slowdown in the United States, with the central bank’s ability to support markets hampered by runaway inflation. Data to be released on Wednesday is expected to show U.S. consumer price inflation hit a new four-decade high of 8.8% last month.

“The 1970s show that it is perfectly possible to have a recession and still too high inflation,” said Nicholas Colas, co-founder of DataTrek Research. “The way the economic data is moving this year, we seem to be in a similar situation for now.”

Recession fears are even more intense in Europe, where governments are gripped by fears that Moscow will cut gas supplies, exacerbating an energy shock and cost of living crisis.

Analysts expect the US Federal Reserve to raise interest rates by 0.75 percentage points at its July meeting, from a current range of 1.5% to 1.75%. Futures markets point to a benchmark US interest rate of just under 3.5% for the start of 2023. In comparison, the European Central Bank is expected to tighten monetary policy more slowly.

The FTSE All-World index of developed and emerging market stocks has fallen more than 20% this year as rising interest rates drive up borrowing costs and depress stock valuations. Investors now see an economic downturn hitting corporate earnings.

“We see the bear market in two phases. The first part focuses on interest rates and the second on earnings,” said Trevor Greetham, head of multi-asset at Royal London Asset Management. “There will be a recession and that will cause a lot of weakness in earnings that hasn’t started yet.”

Consensus analyst forecasts suggest companies listed on the S&P 500 index will post 4.3% year-on-year earnings growth for the second quarter of this year, according to FactSet.

“The current economic downturn, combined with rising costs, will drive more concern in CEO announcements about corporate pricing power and margins,” said Michele Morganti, senior equity strategist at Generali Investments.

Government bonds, which had rallied on Monday, continued to strengthen as traders sought assets traditionally seen as safe havens.

The yield on the 10-year US Treasury note, which moves inversely to its price and underpins the cost of debt around the world, fell 0.08 percentage points to 2.92%. The two-year Treasury yield fell 0.07 percentage points to 3%, trading above the 10-year yield in a so-called inverted yield curve model that has historically predicted recessions.

Futures contracts linked to TTF, Europe’s wholesale gas price, rose 1.4% to €171.5 per megawatt-hour, remaining more than double their level at the start of June.