Dow Drops 799 Points, As Topsy-Turvy Interest Rates Boost Recession Fears

Asia shares sink after Wall Street sell-off

US markets sink on worries over slowing growth, trade truce outcome

The Dow Jones slid 3.1 per cent, the S&P 500 3.2 per cent, and the Nasdaq 3.8 per cent, leading to one United States stocks ETF (Exchange Traded Fund) managed by Russell Investments experiencing its largest one-day drop since 2011.

A protracted tit-for-tat over import tariffs has dominated the economic landscape since Trump first imposed them in January, with markets in turn rallying and tanking as investor sentiment veered. Trump previously said the agreement in Buenos Aires would lead to sales of American farm goods and cuts in Chinese auto tariffs, but Beijing has yet to confirm that.

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 closed lower yesterday: London's FTSE fell 0.6per cent, Paris dropped 0.8 per cent and Frankfurt shed 1.1 per cent.

The Dow sank as much as three percent Tuesday afternoon as losses on Wall Street accelerated amid worries about the US economic outlook and skepticism over the US-China trade truce.

"It's fears about the inverted yield curve and what that means for the economy and is it a precursor to a recession", said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.

For Capital Economics, "we doubt that the ceasefire agreed between Presidents Trump and Xi in Buenos Aires will mark a real turning point in the trade war". The yield on five-year Treasury bonds has fallen below the yield on a three-year bond for two days running, meaning that USA investors are being paid more to hold government debt that matures in three years than in five years.

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Encana Corp. lost 3.6 per cent, while Crescent Point Energy Corp. was down 2.3 per cent. "President Xi and I want this deal to happen, and it probably will". -China trade truce reached over the weekend wasn't all it was cracked up to be.

The US stock and bond markets will be closed on Wednesday to mourn the death of former US President George H.W. Bush. "Financial markets are increasingly showing signs of fear of a recession". The contract for the Dow lost 1.6 percent and that for the S&P 500 declined 1.5 percent.

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Bond prices rose sharply.

The KBW Bank index slid 4.90% with Bank of America Corp and Citigroup Inc dropping more than 5 % each. The slide in bond yields, which affect interest rates on mortgages and other consumer loans, weighed on bank stocks.

CURRENCY: The dollar slipped to 112.80 yen from 113.20 yen. A report issued Tuesday from a Swiss freight company noted that global trade grew just 0.3 percent last month, compared to 3.1 percent for November 2017. The euro strengthened to $1.1349 from $1.1342.

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