|15 August, 2019

Thursday outlook: Recession ahead? Stocks drop on fears

All three major US stock indexes closed down about 3% overnight

Stock market graph chart. The digital information for Forex trading market.

Stock market graph chart. The digital information for Forex trading market.

Getty Images/ Witthaya Prasongsin
  • Asian shares follow US stocks lower
  • Oil prices drop as US inventories rise
  • Middle East markets drop, Egypt outperforms
  • Dollar edges lower, gold gains

Global markets

On Thurdsay morning, Asian shares followed a retreat in Wall Street stocks, which were dragged lower due to fears of a world recession.

Global growth worries have mounted in recent months, as a trade war between the US and China showed signs of dragging on.

An overnight intra-day fall in yields of 10-year US Treasury notes below the two-year yield, the first such drop since 2007, weighed on stocks worldwide.

“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 20per cent,” Chris Rupkey, chief financial economist at MUFG Union Bank, told Reuters.

MSCI's broadest index of Asia-Pacific shares outside Japan dropped 0.9 percent in early trade. All three major US stock indexes closed down about 3 percent overnight.

Oil prices

Oil prices retreated early on Thursday as data showed a surprise rise in US inventories and investors feared of a world recession.

Brent crude was down 37 cents, or 0.6 percent, at $59.11 a barrel by 0300 GMT, after falling 3 percent in the last session.

US crude was down 25 cents, or 0.5 percent, at $54.98 a barrel, having dropped 3.3 percent in the previous session.

Crude inventories increased by 3.7 million barrels to 443 million, last week, compared with analyst expectations for a decrease of 2.8 million barrels, Reuters reported citing data from American Petroleum Institute (API).

Middle East markets

Egypt's blue-chip index EGX30 surged 2.5 percent on Wednesday as Commercial International Bank rose 2.8 percent, while El Sewedy Electric jumped 8.1 percent. Egypt had reported on Thursday better-than-expected inflation data for the month of July.

In Abu Dhabi the index fell 0.9 percent with First Abu Dhabi Bank sliding 0.9 percent, and investment firm Waha Capital plunging 6.9 percent after swinging to second-quarter loss.

In Dubai, the index was down 0.2 percent with blue-chip developer Emaar Properties and Dubai Islamic Bank both trading 0.6 percent lower.

Qatar's index was down 1.6 percent as Industries Qatar decreased 3.9 percent while Qatar National Bank dropped 2.9 percent.

Saudi Arabia and Oman’s stock markets will resume trading on Sunday, following Eid al-Adha holidays.

Kuwait’s premier market index added 0.4 percent while Bahrain’s index fell 0.3 percent.

Currencies

The dollar edged back early on Thursday.

The dollar index .DXY, which measures the greenback against a basket of six major currencies fell 0.1 percent to 97.936.

Precious metals

Gold prices rose on Thursday, as investors fearing a world recession dumped risky assets for safe havens.

Spot gold was up 0.2 percent at $1,519.18 at 0313 GMT.

US gold futures gained 0.2 percent to $1,530.50 an ounce.

(Reporting by Gerard Aoun; Editing by Seban Scaria)

(gerard.aoun@refinitiv.com)


Gain a deeper understanding of financial markets through Thomson Reuters Eikon. 

Our Standards: The Thomson Reuters Trust Principles

Disclaimer: This article is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Read our full disclaimer policy here.

© ZAWYA 2019

More From Equities