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The Asian market last: Asian markets calmed by recession after sales in Wall Street



Hong Kong's Hang Seng Index ( HSI ) was down 0.5%, while China's Shanghai Composite Index ( SHCOMP ) slipped 1.1%. Japan's Nikkei ( N225 ) drops 1.3%. All these indices were down even further earlier.

South Korea's market was closed on Thursday for a public holiday.

Thursday's sale came after US markets fell on the worst day for stocks there in 2019. It happened because, for the first time in over a decade, the bond market flashed a warning signal that has an eerily accurate track record to predict the recession.
  What is the yield curve - and why it matters

The 10-year government bond yield fell below 1.6% Wednesday and fell just below the yield on the 2-year government bond. It marked the first time since 2007 that 10-year bond yields fell below 2-year yields. The inversion of this curve has preceded any recession in modern history.

Investors were lured on Wednesday due to bad news from Germany and China. Germany's economy shrank in the second quarter. An analyst called Wednesday's report "the end of a golden decade for the German economy."
China, meanwhile, had its worst growth in industrial production in 17 years. The metric is important because it measures the production of important enterprises in China's industry, mining and supply sectors.

"Bond markets have marked this move for a long time, but the shift was crystallized by yesterday's sentencing and bleak European and Chinese economic data," Stephen Innes, managing partner of Valor Markets Pte in Singapore, wrote in a research note.

Australia's main index was the biggest loser early Thursday. The decline accelerated when Guy Debelle, Deputy Director of the Reserve Bank of Australia, warned about the consequences of the US-China trade war.

"The uncertainty about how the dispute will play out on both the trade and technology fronts means companies are waiting to see how the uncertainty resolves rather than investing," he said, according to the text of the keynote speech to be delivered. at a conference in Sydney on Thursday. "The longer businesses stay, the weaker demand will be, which will further confirm the decision to wait. There is a risk of a self-fulfilling decline."

CNN Business & # 39; Paul R. La Monica contributed to this report.


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