Hong Kong: Asian markets sank Thursday after the Dow suffered its worst day of the year as fears of a global recession mounted with investors fleeing equities.
Tokyo's key Nikkei index nosedived nearly two percent at the open before recovering slightly to finish the morning 1.2% down. The losses followed a dark day on European bourses and on Wall Street, with all three US benchmarks tumbling around three% and US bond yields plunging as investors deserted stocks for safer Treasury assets.
"The Japanese stock market is sliding against the backdrop of sharp falls in US shares," Okasan Online Securities said in a note. "Worries over the US economic recession grew, while negative economic data for China and Germany also prompted investors to downgrade their views on the global economy," Mizuho Securities added. The yield on the 10-year US Treasury note briefly slid below the yield on the two-year bond, a so-called "inversion" that has been a reliable harbinger of recession for decades.
Coming on the back of an intensifying US-China trade war that shows no signs of resolution, the flight to bonds signalled the growing fears of a global recession.
"US-China trade tensions have metastasised into something more sinister by affecting global growth to such a large degree that bond markets are pricing-in a high probability of a worldwide recession," warned Stephen Innes, managing partner at VM Markets.