Asia stocks paralyzed, bonds electrified by recession risk


Asian stocks braced for more volatility as key banks ‘ eye-catching easings stoked fears of worldwide recession, pushing US returns to near-record lows and for the first time since 2013 lifting gold past $1,500.

The last spot gold was $1,503.56 per ounce, up to $1,510. Since May, the precious metal has risen by 16 percent as the worsening trade conflict between Sino-US caused a rush to secure havens.

Asian share markets were wobbly early Thursday, as investors attempted to discover their footing after sustaining a sequence of heavy losses. Outside Japan, MSCI’s broadest Asia-Pacific share index eased 0.03 percent, shedding 8 percent in less than two weeks.

Japan’s Nikkei rose by 0.1 percent, away from the lows of seven months. The S&P 500’s E-Mini futures lost 0.13%.

There was a lot of relief that Wall Street had managed to come back late overnight, so that at one point the Dow finished with a loss of just 0.09 percent. The S&P 500 was tackling 0.08% and the Nasdaq 0.38%.

Ten-year returns continued to fall below three-month levels, an inversion that in the past reliably predicted recessions. The recent spasm started when central banks in New Zealand, India, and Thailand surprised aggressive easing markets, while it is anticipated that the Philippines will cut later Thursday.

President Charles Evans of the Chicago Fed announced on Wednesday that he was open to lower prices to boost inflation and counter hazards from trade tensions to financial development.

In a 100 percent likelihood of a Fed easing in September and a nearly 30 percent chance of a half-point cut, Futures shifted to price. Some 75 basis points of easing is implied by January, with rates ultimately reaching 1 percent.

Dire information on stoked German industrial production concerns Europe may already be in recession and driven bund returns deeper into adverse land.

All of which fuelled speculation that the main central banks also needed to take dramatic action, if only to avoid an increase in export-crimping currencies.

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