NEW YORK: Worries about economic growth prospects hit global stock markets on Friday, causing sharp price drops on both sides of the Atlantic.
In bloodletting on Wall Street, US stocks suffered their worst day since early January.The closely watched “yield curve” flashed a warning sign that a recession could be looming while monthly US, French and German manufacturing indices all fell — rattling investors who were already uneasy after this week’s surprisingly weak outlook from the Federal Reserve, reports AFP.
“A series of worse-than-expected economic releases from Europe have sounded the alarm bell not just for the bloc, but also the global economy, by providing further evidence of a worldwide slowdown in economic activity,” said XTB analyst David Cheetham.
The so-called yield curve, which tracks the spread between short- and longer-term rates on US Treasury bonds, briefly inverted on Friday, with yields on three month bonds falling below those for 10-year notes — the first time this had happened since before the global financial crisis in 2007.
The yield curve is closely watched since it has inverted prior to recessions in recent decades.
But Justin Lederer, interest rates strategist at Cantor Fitzgerald, told AFP the flip was not cause for so much alarm. “The yield curve inversion reveals more what is going on in the global landscape, the fact that global growth is slowing down,” he said.