Dow suffers worst day of 2019 as recession fears hit US, European stocks

Stock markets on both sides of Atlantic saw hefty losses Wednesday, gripped by fears for global ecomy following poor Chinese and German data and as key US bond benchmark signaled more trouble ahe.

Dow suffered its worst day of 2019, finishing with a loss of some 800 points, or 3.1 percent, at 24,479.42, while leing European bourses shed more than two percent. losses marked a sharp reversal from Tuesday's hey session, when President Donald Trump's decision to push back US tariffs on many key Chinese goods boosted equities.

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But glow from that positive move fed as Chinese industrial output hit a 17-year low and German data showed ecomy contracted in second quarter. yield on 10-year US Treasury te briefly slid below yield on two-year bond, a so-called "inversion" that has been a reliable harbinger of recession for deces.

"On ecomics dashboard of doom, we have ar flashing warning light," analysts at ING ecomics said. " market is worried about a recession." 

"For w we don't see it, but re is a chance fear becomes self-fulfilling," analysts said in a commentary.

Ecomists have warned for months that grinding US-China tre war was crimping capital investment and weighing on global sentiment, alrey dented by slowdown in China and expected Brexit impact on Britain and Europe. And while key US ecomic indicators in employment and consumer spending have remained solid, Wednesday's session suggests some of that confidence is waning. On Thursday, US markets will digest a fresh reing on retail sales for July.

Bond yields have gyrated in recent weeks, with analysts warning that tumbling rates are a sign of a worsening medium-term ecomic outlook.

"Sinking yields are bond market's way of pressuring Fed to step on monetary gas pedal and cut interest rates," said Joe Manimbo, senior market analyst at Western Union Business Solutions.

Trump, meanwhile, used occasion to again blast Federal Reserve Chair Jay Powell, calling him "clueless" for t cutting interest rates more quickly. But some observers wonder wher Fed and or central banks will be able to do much.

"re's a growing narrative that world's central banks, having gone 'all in' to combat 2008 financial crisis, longer have firepower to battle next downturn," Jack Ablin of Cresset Asset Manment said in a te.

He questioned wher global central banks are "shooting blanks." European and US stocks rose across board on Tuesday on news Trump h delayed imposing tariffs on about half $300 billion in goods facing 10 percent duties September 1. urd trend that was mirrored by Asian stocks Wednesday, and Shanghai mand gains despite data showing Chinese factory output expanded last month at its slowest pace in 17 years.

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But reprieve for a swa of Chinese goods seemed geared towards cushioning blow for consumers ahe of holiday shopping rar than easing tensions in bitter tre war. In European tring, Frankfurt slumped to its lowest level since March, after poor second-quarter growth figures highlighted its vulnerability to tre tensions and stoking debate on higher government spending.

Germany actually lagged Italy's standstill ecomy, and France which posted 0.2 per cent growth. Milan's stock index tumbled by nearly three percent, a reflection of Italy navigating a political crisis. Among or markets, oil prices finished sharply lower on expectations for lower demand and as US inventory data showed higher petroleum supplies.