· The Dow Jones Industrial Average more than erased a 155-point rally on Tuesday as a recession indicator from the bond market worsened and fears around the U.S.-China trade war weighed on equity trading.
The Dow fell 120.93 points during the session to finish at 25,777.90, reversing a morning rally that sent the 30-stock index up more than 150 points. The S&P 500 fell 0.32% to 2,869.16 while the Nasdaq Composite dropped 0.34% to finish at 7,826.95 amid losses in Netflix, Nvidia and T-Mobile.
The spread between the 10-year Treasury yield and the 2-year rate fell to negative 5 basis points, its lowest level since 2007. This is called a yield-curve inversion. Experts fear it because in the past it has preceded recessionary periods. The 3-month Treasury bill rate also traded higher than the 30-year bond yield.
· European shares reversed course to close higher Tuesday after China’s State Council announced that it is considering relaxing and removing restrictions on auto purchases as part of a broad move to boost consumption.
The pan-European Stoxx 600 finished 0.5% higher provisionally, with auto stocks receiving a boost from the Chinese announcement as almost every sector closed in positive territory. China also said it will encourage credit support for purchases of new energy vehicles and smart home appliances.
Investors are monitoring the potential recommencement of U.S.-China trade talks and unfolding developments in Italian politics. Market sentiment appeared to improve at the start of the week after President Donald Trump said on Monday that Washington officials had been in touch with Beijing over reopening trade negotiations.
· Stocks in Asia edged up Wednesday morning following an overnight inversion of a closely watched U.S. Treasury yield curve to its worst level in more than a decade.
The Nikkei 225 and Topix in Japan rose fractionally in early trade, while South Korea’s Kospi added 0.36%.
With both countries remaining locked in a diplomatic spat, Japan will officially remove South Korea from a list of preferred trading partners on Wednesday.
In Australia, the S&P/ASX 200 gained 0.1%.
Overall, the MSCI Asia ex-Japan index was 0.02% higher.
Thai
Eng