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Stock markets down because investors fear a recession

2019-08-14T13:40:22.794Z

The stock markets in Europe were on the downside on Wednesday as traders were increasingly fearing a recession of the global economy.


The stock markets in Europe were on the downside on Wednesday as traders were increasingly fearing a recession of the global 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 1.7 percent lower at 536 points around 2.30 pm Dutch time. The German DAX index lost 2 percent to 11,521 points. The British FTSE 100 and French CAC40 were both 1.7 percent lower.

The American stock exchanges are also expected to open lower at 3.30 p.m. Dutch time. The Dow Jones index will start 1.2 percent lower, while the Nasdaq technology fair will probably open 1.5 percent lower.

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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