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Yield Curve Gloom Lashes European Stocks

Namitha Jagadeesh and Justina Lee

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What de-escalation?

Tuesday’s abrupt delay by the U.S. in raising tariffs on some Chinese goods quickly faded from memory as pessimism over the global economy pervaded markets worldwide.

The Stoxx Europe 600 Index declined 1.7% to a six-month low at the close, more than erasing the previous session’s gain. Autos, tech shares and banks led losses. Germany’s DAX plunged 2.2% to its weakest close since March.

While the U.S.-China tit-for-tat over trade may have abated for now, disappointing economic data from Chinese industrial output to German gross domestic product fueled fears of a recession. Risk aversion was in full display in bonds, with the 10- and two-year portion of the U.S. and U.K. yield curves inverting.

Respite has been brief for European stocks of late, hit by a cocktail of risks from around the world including trade uncertainty, Brexit, the prospect of Italian elections and unrest in Hong Kong. The Stoxx 600 is heading for its steepest monthly decline since May.

To contact the reporters on this story: Namitha Jagadeesh in London at;Justina Lee in London at

To contact the editors responsible for this story: Blaise Robinson at, Paul Jarvis

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