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European stock markets are closing down, investors seem to fear recession

2019-08-14T15:52:11.066Z

The stock markets in Europe were closed on Wednesday because traders were increasingly fearing a recession of the world economy.


The stock markets in Europe were closed on Wednesday because traders were increasingly fearing a recession of the world economy.

This fear was fueled by a contraction of the German economy in the second quarter and a lower-than-expected production of Chinese industry.

There have also been developments in interest rates on US and UK government bonds that have been good predictors of a recession in the past.

The AEX index was 1.65 percent lower at 536.66 around 5:30 PM Dutch time. The German DAX index lost 2.17 percent to 11,480 points. The British FTSE 100 and French CAC40 closed 1.7 and 2 percent lower respectively.

The American stock markets are also lower on Wednesday. Around 5.30 pm, both S&P 500 and the Dow Jones index were 2.3 percent lower. Nasdaq technology exchange was 2.6 percent in the minus.

Recession

On Wednesday, for the first time since 2007, the interest rate on a US ten-year government bond fell below the interest rate on a two-year government bond. Normally, the interest should be higher if the duration of a bond is longer. Someone who has lost his or her money longer wants a higher reimbursement for this.

If investors would prefer to put their money away for a lower fee for longer, this would indicate that they are worried about future economic developments. In the past, a recession often followed when this happened, although it could sometimes take another year and a half.

Source: nunl

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