Stocks slide, bonds flash warning after weak data

Bloomberg

American equity-index futures slumped alongside stocks in Europe as weak data from two of the world’s biggest economies overshadowed an apparent de-escalation in the trade war. Treasuries and European bonds rallied, with key parts of both the US and UK yield curves inverting.
Contracts on the S&P 500 fell alongside the Stoxx Europe 600 index as data showed Germany’s economy contracted in the second quarter. The yield on 30-year Treasuries dropped to a record and the gap between that of two-year and 10-year debt inverted for the first time since 2007. The UK yield curve inverted for the first time since the financial crisis and the pound strengthened after inflation unexpectedly rose above the Bank of England’s 2 percent target in July. Asian stocks gained, tracking move on Wall Street even as Chinese retail sales and industrial output data missed estimates. The dollar was steady.
The inverted yield curves, considered a recession warning signal by many analysts, are spooking investors already seeking shelter from the fraught geopolitical climate and the impact of the global trade war. The data from China and Germany added to the gloomy outlook for economic growth on Wednesday, souring the mood after President Donald Trump’s decision to delay tariffs on Chinese imports eased some tension.
“This is not a positive sign for the market,” Jonathan Golub, chief US equity strategist at Credit Suisse, said on Bloomberg TV.
Meanwhile, Hong Kong’s airport resumed normal operations after a chaotic night of protest in which demonstrators beat and detained two suspected infiltrators and Trump warned of Chinese troops massing on the border.
Elsewhere, oil declined after jumping the most since early January. Gold reversed an earlier decline.
Futures on the S&P 500 Index fell 0.9 percent in New York. The Stoxx Europe 600 Index decreased 1.1 percent. The MSCI Asia Pacific Index jumped 0.8 percent. Germany’s DAX Index decreased 1.5 percent. The UK’s FTSE 100 Index decreased 1 percent.
The Bloomberg Dollar Spot Index was little changed. The euro was unchanged at $1.1171. The British pound climbed 0.2 percent to $1.2087. The Japanese yen climbed 0.6 percent to 106.14 per dollar.
The yield on 10-year Treasuries decreased eight basis points to 1.62 percent. The yield on two-year Treasuries fell five basis points to 1.62 percent. Britain’s 10-year yield declined two basis points to 0.47 percent. Germany’s 10-year yield declined three basis points to -0.64 percent. Gold gained 0.6 percent to $1,511.08 an ounce.
Brent crude fell 1.5 percent to $60.35 a barrel.