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Home / Business / Stocks plummet, bonds rise, US recession risk "Amber" flashing by Reuters

Stocks plummet, bonds rise, US recession risk "Amber" flashing by Reuters




© Reuters. Women dressed in celebratory kimonos look at an electronic tablet showing the Nikkei average after the opening ceremony at the Tokyo Stock Exchange (TSE) in Tokyo, which wished the success of the Japanese stock market in Tokyo

. [Von Swati Pandey] 1

9659004] SYDNEY (Reuters) – Investors shed shares on Monday and fled into bond safety, while the Japanese yen was close to a six-week high, with risk-weighted assets in the face of mounting worries over an upcoming US dollar. Out of favor, leading to a collapse in global yields.

US. Stock futures were negative in early Asian trading and e-minis down 0.5 percent. The broadest index for MSCI Asia-Pacific equities outside Japan fell 0.6 percent to a one-week low. Japan's share price fell 2.9 percent, while South Korea's Kospi index fell 1.5 percent, while Australian equities fell 1.3 percent.

On Friday, all three major US stock indices posted the largest one-day percentage loss since Jan. 3, with the S & P 500 down 1.9 percent and the Nasdaq 2.5 percent.

Health Concerns The global economy rose in the last week after cautious US Federal Reserve declarations lowered ten-year government bond yields to their lowest levels since early 2018.

In addition to fears of a more widespread global downturn, German production data showed a decline for the third month in a row. In the United States, preliminary measures of manufacturing and services activities in March showed that both sectors grew slower than in February, according to data from IHS Markit.

As a result, 10-year government bond yields fell below the three-month rate for the first time since 2007. Historically, a reverse yield curve – with short-term falls in long-term interest rates – has signaled an impending recession.

"We have reiterated our preferred yield curve recession models, which now suggest a 30-35 percent likelihood of US recession over the next 10-18 months," said Tapas Strickland, market strategist, National Australia Bank.

Typically, a 40 to 60 percent chance of a recession over the next 10 to 18 months, Strickland added, supporting the analysis on earlier recessions.

"The risk of a recession in the US has risen and is flashing amber, which means that prices in the markets are likely to lower interest rates."

As bonds rallied on Monday, ten-year Japanese government bond yields fell to minus 8bps, the weakest since September 2016. Australian 10-year yields fell to a record low of 1,756.

POLITICAL HEADWINDS

Much of the concern over global growth comes from Europe and China, which have separate customs wars with the United States.

Politics also took center stage in the United States and the United Kingdom.

A nearly two-year US investigation found no evidence of a clash between Donald Trump's electoral team and Russia, which represents a major political victory for the US president.

Mueller's long-awaited report on whether Trump's campaign with Russia was working to help Trump defeat his Democratic opponent Hillary Clinton was an important milestone for his presidency as he prepared for his 2020 re-election.

Political unrest in Britain over the country's exit from the European Union continues to be detrimental to risk-weighted assets.

Sunday's Sun newspaper Rupert Murdoch said in an editorial that UK Prime Minister Theresa May has to resign on Monday once her Brexit deal is approved.

The British pound was down $ 1.3189 after three consecutive days of wild gyrations. The currency fell 0.7 percent last week.

In the currency markets, the Japanese yen – a perceived safe haven – has held its highest level since 11 February. He was last at $ 109.95 per dollar.

The Australian dollar, a liquid substitute for the risk game, fell to $ 0.7073 for the third consecutive losing series.

Commodity prices fell 33 cents to $ 58.71 a barrel. Futures fell 24 cents to $ 66.79.


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