Global stocks fell to more than two months low in early Asian trading on Thursday, tracing the Wall slide as an inverted US bond yield curve sent a flashing warning to investors about rising recession risk.
TOKYO: Global stocks fell to more than two months low prices in early Asian trading on Thursday, tracking the Wall Street slide as a reverse US bond yield curve sent a flashing warning to investors about rising recession risk.
The return on 10-year US Treasuries fell below the two-year yield, intraday, for the first time since 2007, in what is known as a yield curve inversion and broadly seen by investors as a sign of a recession.
Asia stocks fell on opening hours with Japan's Nikkei average of 2.0 per cent and Australian equities down 1.9 per cent.
Graphic: Asian Stock Markets – https://tmsnrt.rs/2zpUAr4ebrit19659008achte MSCI ACWI, which contains readings of 49 stock markets worldwide, plunged 2.1 percent to its lowest level since June 4, while E-Mini futures for the S&P 500 lost 0.1 percent in early Asia.
"The yield curves are all the crying timber that a recession is almost a reality, and investors stumble over themselves to get out of the way when economic recession hurts the company's income and stocks can fall as much as 20 percent," said Chris Rupkey, chief financial officer at MUFG Union Bank.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.4 percent in early trade.  All three major US indices closed down about 3 percent, with the blue chip's Dow with the biggest fall of one day since October, and Europe's most important stock indices down 2% or near that while commodity prices fell almost 5 percent at one point .  Economic data from China and Germany suggested a faltering global economy, hit by the worsening US-China trade war, Brexit and geopolitical tensions.
Senior US officials said Wednesday that China has not made any trade concessions after US President Donald Trump exposed 10 percent tariffs on over $ 150 billion in Chinese imports, the latest sign that the attempt to reach a trade deal went nowhere.
The most important currencies were relatively calm, with the dollar index rising 0.2 percent and the euro falling marginally 0.1 percent to $ 1,1114. The Japanese yen strengthened 0.1 percent against the greenback of $ 105.83 per dollar, after strengthening 0.8 percent on Wednesday.
Oil prices fell 3 percent Wednesday after fresh Chinese and European economic data revived fears of global demand and US commodity stocks unexpectedly rose for the second week in a row.
In early Asian trade, the US West Texas Intermediate (WTI) crude futures fell 0.7 percent to $ 54.82 a barrel, after losing 3.3 percent in the previous increase.
Gold rose over 1 percent on Wednesday as a reversed US state rate and weak Eurozone information pushed investors towards safe haven.
Spot gold stood at $ 1,516.55 per ounce early Thursday, flat on the day and not far from the six-year high mark Tuesday.
(Reporting by Tomo Uetake; Editing by Sam Holmes)