Thu, 22 Aug 2019

U.S. stocks plunge as fears of global recession loom

Lola Evans
15 Aug 2019, 08:24 GMT+10

NEW YORK, New York - Stocks have sustained heavy falls on Wall Street Wednesday, after fears of a global recession accelerated.

Data from China and Germany on Wednesday showed China's economy cooling and Germany's contracting.

"What's happening in Hong Kong, what's happening with Brexit and the trade war, it's all a mess," Analyst Oliver Pursche, from Bruderman, was quoted byn the BBA as saying on Wednesday. "Every central bank around the world is trying to prop up economies and every politician around the world is trying to destroy economies."

The U.S. 2-year treasury yield for a period on Wednesday exceeded that of the 10-year treasury yield, a sure sign of a looming recession.

"It was all negative and not much positive today," Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana told the Reuters Thomson news agency Wednesday. "We're outside of the earnings season and markets are being batted around by news."

"It's a reactionary market right now and probably will continue to be," Carlson added. "My guess is we're probably in for this until after Labor Day."

"It could be different this time," Carlson said. "When you've got $15 trillion in global government debt at negative yields, that's a new animal.

"Even if it is accurate in foreshadowing a recession, that doesn't mean it's coming tomorrow," he added.

At the close of trading Wednesday, the Dow Jones Industrial Average was down 800.49 points, or 3.05%, at 25,479.42.

The Standard and Poor's 500 plummeted 85.72 points, or 2.93%, to 2,840.60.

The Nasdaq Composite shed 242.42 points, or 3.02%, to 7,773.94.

On foreign exchange markets the U..S. dollar and safe-haven currencies, the Japanese yen and Swiss franc were in demand.

The euro sank to 1.1141. The British pound fell to 1.2056.

The Canadian dollar slid to 1.3319. The Australian dollar dropped to 0.6748, and the New Zealand dollar to 0.6436.

The yen rose to 105.78, while the Swiss franc strengthened to 0.9730.

Global markets joined the sell-off inequities. In London, the FTSE 100 fell by 1.42%. The German Dax dropped 2.19%, while in Paris, the CAC 40 gave up 2.08%.

Asian markets escaped the turmoil, absorbing the negative data out of China, but being unaware of the German contraction.

China's industrial ouput for last month came in at 4.8%, well short of expectations by analysts of 5.8%, and last year's July figure of 6.3%.

China's Shanghai Composite shrugged off the disappointing data, advancing 11.66 points or 0.42% to 2,808.91.

The Hang Seng in Hong Kong climbed 20.98 points or 0.08% to 25,302.28.

In Japan, the Nikkei 225 jumped 199.69 points or 0.98% to 20,655.13.

The Australian All Ordinaries rose 29.40 points or 0.44% to 6,677.50.

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