Published: Thu, December 06, 2018
Finance | By Loren Pratt

Dow Jones falls almost 800 points amid trade war, recession fears

Dow Jones falls almost 800 points amid trade war, recession fears

The yield on the 10-year Treasury fell to 2.92 per cent.

Historically, inversion of the yield curve in which short-term rates are higher than long-term ones, has been a precursor to a recession.

The Dow Jones Industrial Average lost 799.36 points, or 3.1%.

ASIA'S DAY: Hong Kong's Hang Seng index fell 1.6 percent to 26,819.58 and the Shanghai Composite Index declined 0.6 percent to 2,649.81.

But the market's optimism faded Tuesday amid published reports questioning the scant details out of the Trump-Xi talks and growing skepticism that Beijing will yield to US demands anytime soon.

Citigroup fell 5.4 percent to $61.63.

The trade dispute has rattled markets in recent months as signs emerged that it has begun affecting corporate profits.

Small-company stocks, which investors see as more risky than large multinationals, fell more than the rest of the market. -China trade war and a possible economic slowdown.

Financial shares .SPSY , which are particularly sensitive to bond market swings, dropped 4.4 percent. Though the S&P 500 Index closed higher on the suspension of tariff escalation, futures retreated Tuesday.

Meanwhile, markets also got a bit of a jolt Tuesday from remarks by John Williams, president of the Fed's NY regional bank. That seemed to counter Fed Chairman Jay Powell's remarks last week. The slide in bond yields, which affect interest rates on mortgages and other consumer loans, weighed on bank stocks.

"Cyclical sectors like technology, financials and industrials led markets lower, while defensive areas like utilities and real estate weathered the storm best".

About 9 billion shares changed hands in US exchanges, above the 7.7 billion-share daily average over the last 20 sessions.

Apple lost 3.7 per cent to $177.99 after the consumer electronics giant was downgraded by HSBC analysts, citing the possibility that iPhone volume and value growth may moderate due to a saturated mobile phone market.

Oil prices headed higher ahead of an OPEC meeting on Thursday, where members are expected to agree to cut output in 2019.

ENERGY: Benchmark U.S. crude rose 38 cents to $53.63 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the global standard, added 0.9 per cent to $62.22 per barrel in London.

CURRENCY: The dollar gained to 113.17 yen from Wednesday's 112.78 yen. The euro strengthened to $1.1349 from $1.1342. The pound erased a gain as the threat of a vote to bring down British Prime Minister Theresa May's government looms should Parliament reject her Brexit deal. Silver rose 1 percent to $14.64 an ounce.

The trade-sensitive industrial sector .SPLRCI fell 4.4 percent, with Boeing BA.N and Caterpillar CAT.N declining 4.9 percent and 6.9 percent, respectively.

European markets fell on Tuesday, with Germany's DAX losing 1.1 percent and France's CAC 40 dropping 0.8 percent.

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