The fears for the global economic slowdown spread from Wall Street to Tokyo, turning the main indexes on the red and raising bearish trend among investors. The initial optimism after temporary trade truce between the US and China evaporated and the market participants analyzed the situation more carefully. The threats for not resolving the trade conflict are growing and the 90-day ceasefire will not be extended by a long-term trade deal.
Moreover, the US bond witnessed the phenomenon of the inverted yield curve, which happens when bond yields at the short end of the bond spectrum rise above those at the long end. This signals for the economic recession, which usually happens between six months and two years after its appearance.
Asian markets recap
Asian stocks ended today’s trading session on red as investors continue to worry about the potential slowdown in global economic growth stemming from the US-China trade war.
In Japan, the blue-chip index Nikkei 225 dropped by 116.72 points, ending the session at 21,919.33 points. The banking sector reported negative results, with Mitsubishi UFJ Financial Group declining by 0.88%, and Nomura’s stocks wiping out 3.28% of their value.
On Chinese markets, the continental index Shanghai Composite reported a decline of 0.61% to 2,649.81 points. The Caixin Services Purchasing Index, which measures economic activity in the Chinese services sector, rose to 53.8 points in November, which is also its highest level in the past five months.
Earlier in the day, the Chinese Ministry of Commerce said the meeting between US President Donald Trump and Chinese leader Xi Jinping on Sunday was very successful. Both sides have reached a temporary trade truce, which will remain valid for the next three months.
Hong Kong’s Hang Seng Index fell 440.76 points, or 1.62%, to 26,819.68 points.
The shares of automaker Baic Motor fell by 10.30% after Bloomberg published a report according to which German concern Daimler has decided to expand its share in the joint venture with the Chinese company.
In Australia, the local S&P ASX 200 index wiped out 44.70 points, or 0.78% of its value, ending the session at 5,668.40 points. Most sectors in the country ended in red territory, the main reason for this was the announced Q3 2018 gross domestic product, which failed to surpass analysts’ forecasts.
The banking sector also reported negative values – the stocks of the four major Australian banks declined during the session. The shares of Australia and New Zealand Banking Group and Commonwealth Bank of Australia reported a decline of 0.72% and 1.13%, respectively.
South Korean benchmark Kospi posted a decline of 0.62% to 2,101.31 points.
European market mid-session recap
French stocks fell sharply on Wednesday, as the bond market signaled a potential economic slowdown and investors watched fresh developments on the Brexit front. The benchmark CAC 40 is down by 44.58 points, or 0.89%, to 4,968.07 points at 10:30 GMT. Banks BNP Paribas, Credit Agricole, and Societe Generale were down over 1% as investors fretted about a drop in bond yields and the implications on growth. The automaker Renault shed by 0.9% and Peugeot lost 1.4% as the White House revoked its threat of European auto tariffs. The stocks of Air France KLM rose by 1.7% after the leader of its pilots’ union lost his bid for re-election.
The British index FTSE 100 dropped by 77.15 points, or 1.10%, to 6,945.61 points after the UK services PMI fell to 50.4 in November from 52.2 in October. In another blow, the UK service sector companies are struggling to find workers. All there factors, as well as the No-Brexit option, dragged down the stocks of the companies.
The German index DAX 30 started the session in negative territory and at 10-:30 GMT is traded with a decrease of 0.81% to 11,243.26 points. The stocks of the chemical giant BASF were down by 1%, while automakers Volkswagen and BMW are on the rise with 1.70% and 0.50% respectively.
Wall Street pre-session recap
After the terrible session yesterday, when Dow Jones wiped out 800 points of its value, the futures on Wall Street indexes are on the rise in pre-market. The futures on blue-chip index Dow Jones are up by 93.00 points at 05:30 AM ET, indicating a positive start of 96.93 points. S&P 500 and Nasdaq are also expected to start on a green with fair value growth of 14.69 points and 46.54 points, respectively.
The markets were positively influenced by the statement of the Chairman of the Federal Reserve Bank of New York, John C. Williams, that in 2019 there will be a further rise in key interest rates. This signals for a possible delay in monetary policy tightening and possible even abandons the projections for next interest rate hike in December.