Trade-war worries have been hammering the financial markets since last Wednesday after data coming from China and Germany indicated trouble for the economies that heavily rely on manufacturing-this happening just after the renewal of American recession fears by the bond market.
Stock commodities have been tumbling in the U.S. and Europe even as risk-averse economists fled to the safety of bonds from the government, pushing the prices of bonds even higher- a move that is entirely in the opposite direction and possibly leading to lowest levels ever seen.
Looking at Wall Street, the S&P 500 reduced by 2.9 %, after a leading drop in the energy sector. Retail shares also experienced a notably sharp fall, after Macy’s Inc (NYSE:M) posted much less quarterly results. Shares from big technological firms, especially those that have a more sensitive outlook for trade wars, also fell. There was also a drop in Europe’s Stock benchmarks.
According to Investo Trend, investors have been responding through the dumping of stocks, even more than had erased gains from a campaign, a day before. Dow Jones Industrial Average had experienced a drop of more than 700 points by the afternoon trade. Technology stock and banks also fell, resulting in retailers coming under extra heavy pressure to sell immediately after Macy's produced dismal earnings report that cut its forecast for a full year.
Traders have a habit of plowing money in the ultra-safe government bonds when they are afraid of a possible economic recession, resulting in lower yields. After the long-term yields have fallen enough, some market watchers will take this as a prediction showing an upcoming recession within one year or two. The current return within the 10-year Treasury has decreased from 2.02% on the 31st of July this year to less than 1.60%. On Wednesday, the 30-year Treasury yield hit the lowest record too.
"Bad global economy news is building up more rapidly than how economists thought. Trying to remain afloat is becoming exhausting," wrote Kevin Giddis, the head of Raymond James' fixed income capital markets.
The S&P 500 further reduced by 2.7%, as at 3:00 p.m. Eastern Central time, bringing back the previous day's jump, this coming hours after the U.S. government delayed their tariff threats on Chinese imports.
The Dow suffered a loss of 720 points, or 2.7%, down to 25,559. Similarly, the NASDAQ Composite index fell at 2.8%, and the Russell 2000 index of small companies stocks experienced a loss of 2.9%.
These losses all came a day after the rallying of stocks after Trump administration delayed $160 billion tariffs on Chinese imports that were meant to be effective starting Sept. 1st this year.
Even as the market was crumbling down on Wednesday, President Trump took the war to Twitter again accusing the Federal Reserve of hampering the United States economy through raising rates too fast last year, without reversing its policy as aggressively as it should have been — just last month, the Federal Reserve had cut its primary rate point by a quarter. Trump also took this opportunity to defend his current trade policy, even after the investors' worry about the existing trade war going on between the two largest economies in the world. They are also concerned that this war might drag on through to the 2020 United States elections, resulting in more damage to the economy.
Signs of weakness in the economy have also affected the commodities markets. The price of copper, which is mostly determined by the outlook on the growth of the Chinese economy, fell by more than 1% in the New York trade. Future prices for American crude oil also fell by more than 3%.