World markets are getting slammed

Global markets are selling off again.

On Wednesday, the rout began in Asia, where Japan's Nikkei index closed in a bear market - defined as a 20% drop from the recent top, while Chinese stocks in Hong Kong fell to the lowest level since 2007.

US stock futures were also sharply lower ahead of the start of trading, with the Dow falling more than 300 points, and the Nasdaq dropping 2%.

To recap, it's been the worst start ever to a calendar year for the stock market. From the first trading day of 2016 to the close on Tuesday, the S&P 500 is down nearly 9%.

Crude oil is also getting hit hard. West Texas Intermediate crude oil, the US benchmark, fell nearly 3% to as low as $28.46 per barrel, the lowest level since 2003. Brent crude, the international benchmark, was also down about 2%, following Tuesday's warning from the International Energy Agency that Iran's return to exporting could drown the world in oil.

Strategists everywhere are having to field panicked questions from clients about whether this means the US economy is headed for a recession. As we detailed over the weekend, many of the pros agree that this is not a likely scenario at the moment.

In a note to clients on Wednesday, Deutsche Bank's Jim Reid suggests that what we're seeing is an expected repricing of relatively pricey global assets.

He writes,

"In our annual long-term studies over the last two or three years we've bemoaned the fact that the vast majority of traditional global assets have recently been very expensive relative to their longer-term trend or fundamental fair value. So in that respect over the last few quarters we've now seen a number of these assets start to cheapen up considerably ... However, at least more opportunities for higher returns in the future are arising with recent market falls. That should be welcomed by most over the medium to longer-term."

This post is being updated.