Classic Recession Signals Occurred In The Bond market, FTSE 100 Down By 103.02 Points

  • Aug 14, 2019 BST
  • Team Kalkine
Classic Recession Signals Occurred In The Bond market, FTSE 100 Down By 103.02 Points

Global Markets: Benchmark indices in the United States were steeply plunged during today’s market session amid classic recession signals occurred in the bond market, with the broader index S&P 500 fell off 71.44 points or 2.48% to 2,853.90, the Dow Jones Industrial Average Index plunged 637 points, or 2.42% to 25,642.68 and the technology benchmark index Nasdaq Composite declined 230.72 points or 2.89% and quoting at 7,785.98 respectively, at the time of writing.

Global News: GDP in Germany contracted by 0.1 per cent in the second quarter amid threat from tariff conflicts and the fallout from Brexit impeding the early recovery in the manufacturing sector, fuelling pressure on the government to provide stimulus through fiscal reforms. The Treasury bond yield curve inverted on Wednesday as yields on 2-year note yield rose above the 10-year bond yield for the first time since 2007, sparking fears of a recession due to global trade tensions and risks such as the consequences of Brexit.

European Markets: The broader equity benchmark index of the UK, the FTSE 100 index plunged 103.02 points or 1.42% against the previous closing level to 7,147.8, the FTSE 250 index leapt down by 277.13 points or 1.46% to 18,731.05 and the FTSE All-Share dragged down by 55.57 points or 1.40% and ended the session at 3,905.59 respectively. Another European benchmark index STOXX ended 6.24 points or 1.68% lower to 366.16 respectively.

European News: Former finance minister Philip Hammond said on Wednesday that any attempt by the prime minister to force the country out of EU without a deal would be blocked by the parliament, and House of Commons speaker John Bercow said that he would resist any effort to prorogue the parliament. Consumer price inflation in July increased to a three-month high of 2.1 per cent, overshooting the target of 2 per cent by the Bank of England and expected to be a result of weakened sterling. For the first time since the global financial crisis, government bond yield curve inverted on Wednesday as the yield on the 10-year gilt fell below the yield on the two-year gilt.

London Stock Exchange (LSE)

Top Performers Stocks: BBY (BALFOUR BEATTY PLC), AVST (AVAST PLC) and INTU (INTU PROPERTIES PLC) are top performers of the day and up by 9.32%, 8.67% and 8.40% respectively.

Top Laggards Stocks: KIE (KIER GROUP PLC), MCLS (MCCOLL'S RETAIL GROUP PLC) and SPD (SPORTS DIRECT INTERNATIONAL PLC) are the top three laggards of the day and down by 13.83%, 10.13% and 10.01% respectively.

FTSE 100 Index

 FTSE 100 Index Chart: 5-days Price Performance (as on August-14-2019), after the market closed. (Source: Thomson Reuters)

Top Risers Stocks: ADM (ADMIRAL GROUP PLC), DLG (DIRECT LINE INSURANCE GROUP PLC) and ULVR (UNILEVER PLC) are the top three gainers in today’s session and up by 4.08%, 1.23% and 1.22% respectively.

Top Fallers Stocks: MRO (MELROSE INDUSTRIES PLC), EVR (EVRAZ PLC), and NMC (NMC HEALTH PLC) are top laggards at the FTSE 100 index and down by 5.75%, 5.21% and 4.88% respectively.


Top Performers Sectors: Utilities (+0.41%) and Consumer Non-Cyclicals (+0.15%).

Top Fallers Sectors: Basic Materials (-2.11%), Energy (-2.06%) and Industrials (-1.82%).

Foreign Exchange and Fixed Income

FX Rates (at the time of writing): GBP/USD and EUR/GBP were trading at 1.2060 and 0.9243 respectively.

10-Year Bond Yields (at the time of writing): US 10Y Treasury and UK 10Y Bond yields were exchanging at 1.586% and 0.439% respectively.

With Bank of England reducing the interest rates to a historic low level, the spotlight is back on diverse investment opportunities. 

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