TechInAfrica – The world is on alert for possible global slow down after stocks performance plunged on Thursday, giving away worrisome developments for Germany, Hong Kong, Italy, and Argentina.
Bloomberg’s data shows the yield of two-year US Treasury bonds above 10-year Treasury yields for the first time since 2017, due to the sliding demand for bonds that pushed the yield. The inverted yield curve means a red flag for the business since it has been historically followed by a recession.
Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics noted that the risk of a recession has become elevated.
Following the outcome is Germany shrinking by 0.1% in the second quarter, concluding a sharp turn from its 0.4% first-quarter growth. Financial Times suggests that the development reflected weakness for its auto industry, concerns regarding the UK’s withdrawal from the EU, and the complication of US-China trade war against Germany’s export-focused manufacturing sector. This bleak development follows shortly after Argentina’s awry situation: plummeted currency, stock market, and government bonds earlier this week with an election upset incident.
Meanwhile in Hong Kong, the heated situation between the airport region-occupied protesters on the second day causing the Chinese military filling in the border and according to Neil Wilson, a chief market analyst for Markets.com, from his research note, Hong Kong remains a trouble spot because of the tense-induced situation and further escalation will be seen as a real risk.
Italy is in no better condition, as similar tense political situation is upfront. Matteo Salvini intends on bringing down the coalition government and for the following week a discussion about the deputy prime minister’s motion of no confidence will be held by the Senate.
Reuters revealed China’s slowest growth rate since February 2002 through its estimated industrial output that rose only at 4.8% in July.
The situation between US and China were far more positive than the recent world events, as reflected from the development of the foregoing trade war. Weeks before, President Donald Trump announced that he would extend all virtual tariffs of Chinese goods at the beginning of September, but soon have his administration decided to exempt some items such as cellphones, toys, laptops, and video game consoles and halt some of the tariffs into mid-December.
Although the US trade officials are restarting talks with their Chinese counterparts, analysts remain skeptical about the possibility of an agreement between the two parties, unlike US optimism that the talks might lead to a deal that would dismiss the year-long trade dispute of these world’s two biggest economies. Neil Wilson stated in his research note that the tariffs delay looks more like a temporal reprieve for domestic reasons rather than a genuine signal of willingness to talk with China.
“The president didn’t like what he saw in the markets and decided to intervene.”
This is the market roundup as of 10:34 A.M. ET:
- US stocks dropped in early trading. The Dow Jones Industrial Average and S&P 500 slumped 1.6%, while the Nasdaq slid 1.9%.
- European equities plunged with Germany’s DAX down 2.1%, the Euro Stoxx 50 down 2%, and Britain’s FTSE 100 down 1.4%.
- Asian markets rallied with China’s Shanghai Composite up 0.4% and Japan’s Nikkei up 1%. Hong Kong’s Hang Seng up 0.1%.
- Oil prices have plunged with West Texas Intermediate crude down 3.4% at $55.20 a barrel, and Brent crude down 3% at $59.50.
A roundup of the situation so far:
- Global stocks slumped Thursday, acquits worry for some countries
- Hints of recession from the latest US bonds yield curve
- Germany’s sharp turn in economy growth