Oil plunged more than 25%, 10-year Treasury yields dipped below 0.5%, stocks dropped, and currencies swung as the prospect of an energy glut ratcheted up turmoil across markets world-wide.

Investors are responding to Saudi Arabia’s decision over the weekend to cut most of its oil prices and boost output, despite existing threats to demand from the coronavirus epidemic. The move escalates a clash with another major oil producer, Russia.

“The fear today is about a global recession,” said Thomas Hayes, chairman of Great Hill Capital, a hedge fund- management firm based in New York. He said lower oil prices make it more likely some companies would default on their debts.

“If Russia does not come back to the table soon, investors worry the default risk and credit spreads widening will lead to tighter credit and even a recession,” Mr. Hayes said.

Trading in futures tied to the S&P 500 fell by the maximum 5% allowed in a single session. This meant trading was limited for the first time since shortly after President Trump’s 2016 election victory. By early afternoon in Hong Kong on Monday, S&P 500 e-Mini contracts were 4.9% lower at 2,819.00, about 16.8% below a recent high registered on Feb. 19.

U.S. government bonds, which have already rallied to unprecedented highs, extended gains. The yield on the 10-year Treasury stood at 0.525% after briefly dropping below 0.5%. The equivalent 30-year yield fell below 1%, reaching 0.982%. Yields move inversely to prices.

In the Asia-Pacific region, the S&P/ASX 200 index in Australia dropped 7.3%, suffering its worst day since October 2008, during the depths of the global financial crisis. The Australian dollar, which is sensitive to shifts in demands for commodities, fell more than 1%, with one Australian dollar buying 0.6535 U.S. cents.

Japan’s Nikkei 225 declined 5.1%, its biggest daily drop since 2016. The yen, which often rallies in times of market stress, surged to trade below 103 to the dollar, at its strongest levels since 2016.

Benchmark stock indexes in Hong Kong and Shanghai dropped more than 4% and 2%, respectively. China’s onshore markets, in Shanghai and Shenzhen, have been comparatively resilient in recent weeks.

Saudi Arabian state oil giant Aramco said in a notice to buyers sent Saturday that it was cutting most of its prices, while preparing to boost crude output. Oil prices dropped after the market reopened Sunday evening in New York. Brent crude, the global gauge of oil prices, fell about 27.5% to $32.84 a barrel, and U.S. crude futures fell by a similar amount.

Last week, Saudi Arabia was unable to persuade Russia to join its plan for deeper crude production cuts at a gathering of the Organization of the Petroleum Exporting Countries and its allies in Vienna. The failure signaled the end of a four-year collaboration between OPEC’s member nations and 10 nonmembers led by Russia.

“The collapse of the talk between Russia and OPEC crushed investors’ confidence,” said Alvin Ngan, a strategist with Zhongtai International Holdings in Hong Kong, adding that sentiment was already fragile given the uncertainties created by the novel coronavirus.

In Australia, large energy stocks plunged by double-digit percentages on fears of a prolonged period of low crude- oil prices. Shares in Woodside Petroleum Ltd. fell by 18% while mining giant BHP Group Ltd. dropped by 14%.

The ASX 200 has now fallen 19.6% since hitting an all-time high on Feb. 20, putting it close to bear-market territory, which is typically defined as a peak-to-trough decline of more than 20%. The Nikkei 225 has fallen more than 18% from its highest closing level this year.