Following global recession fears and a brief inverted US bond yield, markets in Asia followed suite of US markets and retreated on Thursday. Adding fuel to the fire, China threatened to retaliate to the latest US tariffs, causing stocks to dip even further.
The CSI300 index fell 0.5%, while the Shanghai Composite Index lost 0.6%. Hong Kong’s HSI lost over 1.6% in the early hours on Thursday, but managed to bounce back from a 7-month low by market closing fueled by bargain investors from Mainland China. The ongoing Protests in Hong Kong caused Property and telecom shares to lead this gain by gaining 3% and 4% respectively.
Markets in Australia, New Zealand, Japan and the rest of Asia were also affected by recession fears with the S&P/ASX 200 sinking 2.9% and the Nikkei losing 1.21% to touch a 9-day low.
Eurpean stocks dropped to a six month low, following global cues of a looming recession. The STOXX 600 index lost 1.7% while other indices in Europe fell more than 2% before making up some loses as the US market recovered on Thursday . The US-China trade war has been bleeding Germany’s export sector causing German yields to fall as well.
Looking at individual stocks, Carlsberg was up 4.2% and reporting strong earnings, growth prospects in Asia. Shares of Danish facility services ISS fell 9.4%, pushing it to the bottom of the European Blue Chip index while insurance group Aegon fell over 7% after appointing the head of their biggest rival, NN Group, as its new CEO.
In Italy, there has been a sell off of Italian bonds with the country thrown into financial and political turmoil as the Prime Minister Delegate failed to secure support from major political parties.
This week started with fears of a global recession due to the US-China trade war, which coupled with falling bond yields and unrest in Hong Kong caused markets to fall. The Dow Jones Industrial Average dropped over 1.29% to close at 25,896, while the S&P 500 declined by as much as 1.23% this Monday.
As fears over the trade war and global economic growth concerns continued through the week, the demand for government bonds increased, causing US Treasury yields to plummet on Wednesday through Thursday. The spread between the 2 year and 10 year Treasury note yields inverted on Wednesday, while the 30 year Treasury yields dropped to 1.916%, the lowest it has been since the 1970’s.
Meanwhile, the Dow fell another 800.49 (3.1%) points on Wednesday which marked its greatest one-day loss since December 2018. Indices recovered on Thursday with the Dow gaining 0.39% to close at 25,579.39, and the S&P 500 gaining 0.25% to close at 2,847.60.
Gains in the market on Thursday were propelled by Walmart (One of the largest companies by revenue in the world) stock gaining over 6.11% due to outperforming earnings expectations along with Amazon gaining 0.75% due to its “Prime Day” promotion.
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