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Shares tumble, bonds rally as US recession risk flashes "amber" by Reuters



© Reuters. Women dressed in ceremonial kimonos look at an electronic map showing the Nikkei average after the opening ceremony on the Tokyo Stock Exchange (TSE), which was held to wish the success of Japan's stock market in Tokyo

By Swati Pandey [1

9659004] SYDNEY (Reuters) – Investors dumped shares Monday and fled to the security of bonds, while the Japanese yen hovered close to a six-week high as risk amounts fell in favor of growing concerns about an upcoming US recession that sent global dividends .

U.S. Stock futures became negative in early Asian trading of e-minis for skidding 0.5 percent. MSCI's widest Asia-Pacific index outside Japan fell 0.6 percent to one week low. Japan's tumbled 2.9 percent, South Korea's Kospi index fell 1.5 percent, while Australian equities fell 1.3 percent.

On Friday, all three major US stock indexes recorded their largest one-time loss since January 3, with moving 1.8 percent, S & P 500 from 1.9 percent and Nasdaq dropped 2.5 percent.

Concerns about the health of the world economy increased last week after cautious comments from the US Federal Reserve sent 10-year tax dividends to the lowest since early 2018.

Due to the fear of a more widespread global decline, manufacturing product data from Germany showed a contraction for the third straight month. And in the US, initial production and service activity measures in March showed that both sectors grew at a slower pace than in February, according to data from IHS Markit.

On the other hand, 10-year government bonds fell below the three-month rate for the first time since 2007. Historically, a reverse yield curve – where long-term rates fall in the short term – signaled an upcoming recession.

"We have resumed our preferred yield curve recession models, which now propose a 30-35 percent chance that a US recession will take place over the next 10-18 months," says Tapas Strickland, marketing strategist at National Australia Bank.

Typically, a 40-60 percent probability sees a recession within the next 10-18 months, Strickland added, which based the analysis on previous recessions.

"The risk of a US recession has risen and flashes amber and it will keep market priming a high chance for the Fed cutting rates."

When bonds were held on Monday, yields on 10-year Japanese government bonds fell to minus 8 basis points, the weakest since September 2016. Australian 10-year yields dropped to a record low of 1,756.

POLITICAL WINDOWS

Much of the concern about global growth stems from Europe and China, fighting for separate tariff wars with the United States.

The policy was also in focus in the US and the UK.

An almost two-year US study found no sign of the interaction between Donald Trump's election team and Russia in a major political victory for the US president.

The long-awaited Mueller reports whether Trump's campaign collaborated with Russia to help Trump defeat his democratic opponent, Hillary Clinton, marked an important milestone in his presidency as he prepares his re-election in 2020.

Political turmoil in The UK over the country's exit from the EU is also a feature of venture capital.

On Sunday, Rupert Murdoch's Sun newspaper said on a front page that British Prime Minister Theresa May will announce Monday that she will stop as soon as her Brexit deal is approved.

The British pound was a shadow lower of $ 1,3189 after three even days of wild gyrations. The foreign exchange market fell 0.7 percent last week.

In the foreign exchange markets, the Japanese yen – a perceived safe haven – held almost its highest since February 11. It was the last apartment of $ 109.95.

The Australian dollar, a floating risk play proxy, was down for its third straight session of loss of $ 0.7073.

In goods, 33 cents fell to $ 58.71 per item. Barrel. futures eased 24 cents to $ 66.79.


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