It was a rollercoaster session on Wall Street as investors looked to bond markets for signals of a potential recession.
Market snapshot at 7:50am (AEST):ASX SPI futures -0.2pc at 6,438, ASX 200 (Wednesday’s close) +0.6pc at 6,520AUD: 67.59 US cents, 55.66 British pence, 60.33 euro cents, 71.79 Japanese yen, $NZ1.05US: Dow Jones -0.1pc at 26,007, S&P 500 +0.1pc at 2,884, Nasdaq +0.4pc at 7,863Europe: FTSE 100 +0.4pc at 7,199, DAX +0.7pc at 11,650, CAC +0.6pc at 5,267, Euro Stoxx 50 +0.6pc at 3,310Commodities: Brent crude -2.5pc at $US57.46/barrel, spot gold +1.6pc at $US1,498.86/ounce, iron ore -4.3pc at $US93.31/tonne
The wild trading day began with the Dow Jones plunging 589 points within its first hour.
But the industrial-skewed index managed to claw back most of those losses to close relatively steady, down 22 points to 26,016.
Likewise, the benchmark S&P 500 spent most of its day in the red — but managed to stage a turnaround in the final hour, lifting 0.1 per cent.
The tech-heavy Nasdaq closed 0.4 per cent higher, after recovering from a 1.7 per cent fall earlier in the day.
Bond market’s recession signals
The latest global market turmoil was driven by US President Donald Trump threatening to slap 10 per cent tariffs on $US300 billion of Chinese imports, prompting Beijing to devalue the yuan to a decade low.
That led to the US labelling Beijing a “currency manipulator” earlier this week.
As the US-China trade war escalates with no end in sight, investors rushed to buy safe-haven assets like government bonds.
Wall Street’s wild swings overnight were driven by rising fears of recession, or at least a sharp economic slowdown, as signalled by the US Government debt (also known as the Treasury bond) market.
Prices and yield move in opposite directions