Recession fears hit global markets – business live

Rolling coverage of the latest economic and financial news, as markets are hit by anxiety over the global economy

A sea of red ink is seeping across Europe’s main stock markets.

It’s not a major sell-off at this stage, but Germany’s DAX has hit its lowest level in almost 6 weeks.

European stock markets have also joined the selloff.

The Stoxx 600, which tracks the biggest companies across Europe, has shed 0.6% in early trading.

Investors should be prepared for a tough week as we close out March and the first quarter. Global stocks have taken a battering in the last couple of sessions as bond yields have sunk across the board. The slide in yields last week was a red flag for equities; the bond market loudly proclaiming that it’s not confident about the growth outlook.

The bond market has been trying to speak for a while now but it’s been shouted down by the equity market rally – until now. Although allocations were suggestive of a lack of animal spirits driving the rally as investors were long low growth/low inflation plays, and short inflation/growth.

Britain’s FTSE 100 has dropped 41 points at the start of trading to 7167. That’s a 0.5% decline, following Friday’s 2% tumble.

Most shares are down, with technology stocks, miners and industrial groups leading the selloff.

Charles Evans, president of the Chicago Federal Reserve, has downplayed the dangers of a recession.

Speaking at a conference in Hong Kong, Evans argued that America’s economy is in good shape:

“I look at the nature of the U.S economy, I look at the labor market, it’s strong, the consumer continues to be strong.”

“Some of this is structural, having to do with lower trend growth, lower real interest rates.

I think, in that environment, it’s probably more natural that yield curves are somewhat flatter than they have been historically.”

On Friday, after Fed turned decidely dovish, the US 3m-10y yield curve spread inverted (an indicator of impending recession in 18 months) for the 1st time since 2007. Benchmark German govt bond yield turned negative. Img: Yield Inversion indicating a recession. Source: Bloomberg.

Jasper Lawler of CMC Markets says America’s central bank, the Federal Reserve, has spooked investors with some unexpectedly cautious forecasts last week:

Concerns over the health of the US economy sent Wall Street sharply lower on Friday, with all three main US indices recording the worst session since January 3rd. After the Fed doubled down on dovish rhetoric, US treasury yields inverted for the first time since 2007 on Friday.

An inverted yield curve, the 10-year yields falling below the 3-month yield, has in the past signalled a recession. The last inversion was in 2007. With the recession warning bell blaring, investors will struggle to justify buying into riskier assets right now.

Jim Reid of Deutsche Bank says the risks of a US recession next year are rising, following the collapse in bond yields in recent days.

We don’t care why the curve inverts but instead think that in a capitalist economy like the US, animal spirits – and with it economic growth – are very linked to the steepness of the curve.

Before last week, our view was that the curve may invert in the second half of 2019 and elevate the risks of a recession in the second half of 2020. However, the move over the last few days increases the risks of both arising earlier even if we haven’t yet changed our view.

Recession fears are driving investors into safe-haven government bonds, and out of shares (which are usually seen as riskier).

This is sending bond prices soaring, pushing down the interest rate (or yield) on the debt.

Adding to the fears of a more widespread global downturn, manufacturing output data from Germany on Friday showed a contraction for the third straight month.

In response, US 10-year treasury yields slipped below the three-month rate for the first time since 2007 as nervous investors ploughed their money into the safe haven of bonds rather than riskier assets such as shares.

Aussie yields collapsing – 10 year bond opened below 1.8% for the first time on record, hit record low 1.762%

Australian 2-5 Years Yield curve inverted by 1bp

Related: Asian stocks slump as US recession fears grip markets

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Overnight, stocks in Asia sold-off heavily as concerns for the health of the global economy weighed on sentiment. Heavy losses were sustained in Japan and China.

All the Brexit chatter has been about the state of the UK economy, but mainland Europe is limping along, and the bloc is looking very weak. Brussels is holding firm, but the eurozone is struggling and France and Germany would be badly impacted by a no-deal Brexit.

Related: Markets drop sharply as fears of global slowdown intensify

#US 3m10y yield curve inverts for first time since May 2007. There have been false signals before. But if the yield curve remains negative and by more, historically this has been a fairly good predictor of a US recession over the coming year.

European Opening Calls:#FTSE 7176 -0.43%#DAX 11285 -0.69%#CAC 5244 -0.49%#MIB 20936 -0.68%#IBEX 9133 -0.72%

Related: Brexit: leave-backing MPs pile on pressure as May’s deal drifts away

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Asian stocks slump as US recession fears grip markets

Australian treasury yields hit a record low in a grim portent for the economy, while the Nikkei falls 3% in wider share selloff

Shares in Asia Pacific have slumped after a key market indicator flashed an “amber warning” that the United States is heading for a recession.

Bond yields also continued to fall across the world with Australian 10-year treasury yields falling to a record low on Monday of 1.756% in what analysts see as a strong indicator of a downturn hitting the resource-rich country.

Related: The European Union has bigger problems to deal with than Brexit

Japan 10Y yields collapse further into negative territory

Related: Donald Trump and Xi Jinping miss a trick over trade | Jeffrey Frankel

Bond futures: A closely watched measure of the yield curve briefly inverted Friday — with the yield on the 10-year Treasury note falling below…

Aussie yields collapsing – 10 year bond opened below 1.8% for the first time on record, hit record low 1.762%

Australian 2-5 Years Yield curve inverted by 1bp

Continue reading…