Asia Stocks Slump On Recession Fears
Asian markets sank Thursday after the Dow suffered its worst day of the year as fears of a global recession mounted with investors fleeing equities
Hong Kong, (UrduPoint / Pakistan Point News - 15th Aug, 2019 ) :Asian markets sank Thursday after the Dow suffered its worst day of the year as fears of a global recession mounted with investors fleeing equities.
Tokyo's key Nikkei index nosedived nearly two percent at the open before recovering slightly to finish the morning 1.2 percent down.
The losses followed a dark day on European bourses and on Wall Street, with all three US benchmarks tumbling around three percent and US bond yields plunging as investors deserted stocks for safer Treasury assets.
"The Japanese stock market is sliding against the backdrop of sharp falls in US shares," Okasan Online Securities said in a note.
The yield on the 10-year US Treasury note briefly slid below the yield on the two-year bond, a so-called "inversion" that has been a reliable harbinger of recession for decades.
"US-China trade tensions have metastasised into something more sinister by affecting global growth to such a large degree that bond markets are pricing-in a high probability of a worldwide recession", warned Stephen Innes, managing partner at VM Markets.
Weeks of pro-democracy protests in Hong Kong have added to the climate of uncertainty, with Beijing referring to the increasingly violent demonstrations as "terrorism", stoking fears of a Chinese crackdown.
- 'Risk-toxic environment' - Economists have warned for months that the trade tensions were threatening investment and dampening global sentiment, which is already suffering due to China's slowdown and fears over Brexit's impact on Britain and Europe.
"In this risk-toxic environment, the only thing that could help shift equity sentiment is if the Fed pulls back to back (rate cuts) out of their hat, something the markets are beckoning them to offer up but are unlikely to deliver," said Innes.
US President Donald Trump, who has repeatedly slammed the Federal Reserve for not cutting interest rates more sharply and frequently, blasted Chair Jerome Powell on Wednesday, calling him "clueless" for being too slow to lower rates.
But some observers wonder whether the Fed and other central banks will be able to do much to avert a downturn as the trade spat deepens.
- Key figures around 0300 GMT - Tokyo - Nikkei 225: DOWN 1.2 percent at 20,404.92 (break) Hong Kong - Hang Seng: UP 0.1 percent at 25,332.01 Shanghai - Composite: DOWN 0.7 percent at 2,790.71 Euro/dollar: UP at $1.1143 from $1.1138 at 2100 GMT Pound/dollar: DOWN at $1.2053 from $1.2056 Euro/pound: UP at 92.45 pence from 92.38 pence Dollar/yen: UP at 105.93 Yen from 105.78 yen West Texas Intermediate: DOWN 25 cents at $54.98 per barrel Brent North Sea crude: DOWN 39 cents at $59.09 per barrelNew York - Dow: DOWN 3.1 percent at 25,479.42 (close)London - FTSE 100: DOWN 1.4 percent at 7,147.88 (close)