- U.S. futures, European shares tumble on dismal economic data from China, Germany
- Yields edge toward lowest level since Oct. 2016
- Yen and gold rise, oil drops as lowest Chinese industrial output in 17 years reignites risk-off
Treasury yields, European shares and futures on the , and tumbled in unison this morning after worrying economic data from China and Germany overshadowed a pause in U.S.-China trade jitters, reawakening the specter of a global recession.
The fell with banks stocks, with Deutsche Bank (DE:) and Banco Comercial Portugues (LS:) leading losses after Germany reported a 0.1% contraction in second-quarter , from 0.4% growth in the first quarter, with a trade war-driven fall in exports as the direct culprit of the tumble.
The German data flop followed another key red flag from China, where both and readings vastly missed expectations—with the latter growing at the slowest pace in 17 years.
When the largest economy in the eurozone falls back into negative growth and a crucial economic indicator in the second largest economy in the world hits a near two-decade low, investors’ recessionary fears inevitably spike.
Global Financial Affairs
All these come a day after U.S. President Donald Trump delayed the 10% duties on $300bn of Chinese consumer goods and China confirmed it was staying on track for September talks, sending U.S. stocks to their biggest jump in two months.
Dow Daily Chart
Despite the much-celebrated rally, equities found resistance by the top of a bearish flag, which remained intact. Note, the flag develops right on the uptrend line since the Christmas-Eve selloff.
VIX Daily Chart
The traded according to a pennant shaped consolidation above the levels of most of the year’s volatility since the aftermath of the December rout.
Today’s reversal only highlights how unreliable extreme gains can be in this market environment.
China’s still managed to seal a 0.42% climb in the early Asian session, as investors clung onto Wall Street’s trade-relief rally.
UST Hourly Chart
Meanwhile, the yield on Treasurys erased all of yesterday’s gains, falling to one basis point away from the lowest level since Oct. 2016. Technically, on the hourly chart, rates may have completed a H&S top.
The pared a small portion of yesterday’s risk-on plunge. also edged higher against a weakening and a risk-off market.
WTI Daily Chart
After jumping the most since January on the apparent softening U.S.-China trade rhetoric, slid on dismal Chinese data and a buildup. Technically, the price hit the resistance of the falling channel top, where supply overcomes demand.
- Companies releasing results include Jd.Com (NASDAQ:) and Alibaba (NYSE:), Australia’s Telstra (ASX:), giant retailer Walmart (NYSE:), NVIDIA (NASDAQ:), Swisscom (SIX:) and the Danish brewer Carlsberg (CSE:) CSE:).
- Thursday sees the release of U.S. , and data.
- Germany’s slid 1.2%.
- The climbed 0.8%.
- The Dollar Index declined 0.05%.
- The increased 0.1% to $1.1185.
- The jumped 0.4% to 7.014 per dollar.
- The was little changed at $1.2062.
- The Japanese yen gained 0.4% to 106.32 per dollar.
- The yield on 10-year Treasurys slipped four basis points to 1.66%.
- Britain’s yield was unchanged at 0.494%.
- Germany’s yield dropped one basis point to -0.62%.
- West Texas Intermediate crude dipped 1.2% to $56.43 a barrel.
- Gold fell 0.1% to $1,500.38 an ounce.
- increased 2% to $88.55 per metric ton.