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GLOBAL MARKETS-Global stocks slide as bond markets send recession warning

Published 2019-08-14, 08:28 p/m
© Reuters.  GLOBAL MARKETS-Global stocks slide as bond markets send recession warning
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* 2-yr, 10-yr Treasury yields invert for first time in 12 years

* Dow closes down 800 points, worst day of 2019

* MSCI ACWI, Nikkei slip in early trading

* Asian stock markets: https://tmsnrt.rs/2zpUAr4

By Tomo Uetake

TOKYO, Aug 15 (Reuters) - Global stocks slumped to more than two-month lows in early Asian trade on Thursday, tracking the Wall Street slide as an inverted U.S. bond yield curve sent a flashing warning to investors about rising recession risks.

Yields on 10-year U.S. Treasury notes US10YT=RR fell below the two-year yield US2YT=RR , intra-day, for the first time since 2007, in what is known as a yield curve inversion and widely seen by investors as a sign that a recession is coming.

Asia shares sank at the open with Japan's Nikkei average .N225 tumbling 2.0% and Australian stocks .AXJO falling 1.9%.

The MSCI ACWI .MIWD00000PUS , which incorporates readings of 49 equity markets across the world, shed 2.1% to its lowest level since June 4, while E-Mini futures for the S&P 500 ESc1 lost 0.1% in early Asia.

"The yield curves are all crying timber that a recession is almost a reality and investors are tripping over themselves to get out of the way as economic recession hurts corporate earnings and stocks can drop as much as 20%," said Chris Rupkey, chief financial economist at MUFG Union Bank.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS dropped 0.4% in early trade.

All three major U.S. indexes closed down about 3%, with the blue-chip Dow .DJI posting its biggest one-day point drop since October, major equity indices in Europe closed down 2% or near that while crude prices slumped almost 5% at one point.

Economic data from China and Germany suggested a faltering global economy, hit by the worsening U.S.-China trade war, Brexit and geopolitical tensions. U.S. officials said on Wednesday China has made no trade concessions after U.S. President Donald Trump postponed the 10% tariffs on over $150 billion worth of Chinese imports, the latest sign that efforts to reach a trade deal were going nowhere. currencies were relatively calm, with the dollar index .DXY rising 0.2% and the euro EUR= adding a marginal 0.1% to $1.1144. The Japanese yen strengthened 0.1% versus the greenback at 105.83 per dollar, having firmed 0.8% on Wednesday.

Oil prices shed 3% on Wednesday after fresh Chinese and European economic data revived global demand fears and U.S. crude inventories rose unexpectedly for the second week in a row. O/R

In early Asian trade, U.S. West Texas Intermediate (WTI) crude futures CLc1 dropped 0.7% to $54.82 a barrel, having lost 3.3% in the previous session.

Gold rose over 1% on Wednesday as an inverted U.S. Treasury yield curve and weak euro zone data drove investors toward safe-haven bullion. GOL

Spot gold XAU= stood at $1,516.55 per ounce early Thursday, flat on the day and not far from its six year high marked Tuesday.

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