Recession fears hit global markets as bond yields keep falling - as it happened

And finally.... Wall Street has closed, with the main indices virtually unchanged.

A day that began with a rout in Asia, and a 3% tumble on the Nikkei has ended with the Dow Jones industrial average up 0.07%, or 17 points.

But traders will point instead to the bond market, where anxiety over a global slowdown has pushed Treasury yields lower again.

With parts of the US yield curve now inverted (investors getting a better return on short-dated rather than long-dated bonds), fears of a recession are building.

On that note, goodnight!

IMF chief Christine Lagarde has weighed in on the side of campaigners calling for tech giants to pay more tax.

In a speech in Washington, Lagarde says:

“An impetus for rethinking international corporate taxation stems from the rise of highly profitable, technology driven, digital-heavy business models.

“The ease with which multinationals seem able to avoid tax, and the three-decade long decline in corporate tax rates, undermines faith in the fairness of the overall tax system. The current international corporate tax architecture is fundamentally out of date.”

What a difference a year makes in the bond market...

Here’s our news story on the latest twist in the Sports Direct/Debenhams row.

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John Colley, professor of practice at Warwick Business School, explains why Sports Direct is now considering a bid for Debenhams:

“Mike Ashley is aware his 29.9% shareholding has virtually no value and that is unlikely to change.

“What he wants is control. That is why he is now considering a fresh bid for the remaining shares.

Debenhams will very likely end up either with a successful Company Voluntary Arrangement or a Receivership.

“Ashley can certainly see ways of extracting value but he wants to ensure he captures as much of that value as possible. That might include selling himself the better parts of the business such as Magasin du Nord.

“The current lenders might prefer not to see Mike Ashley looking after their interests, especially as he already has his hands full with House of Fraser.

“However, to avoid that they have to find £200million and fend over any further bid from Sports Direct. The behind the scenes negotiation will be very interesting.”

The news that Sports Direct could bid for Debenhams comes just a few days after it offered £100m for its Danish stores.

Debenhams declined, despite being desperate for cash as it tries to restructure its business and lower its debt pile.

SPD has also offered a £150m loan, in return for making its boss Mike Ashley the CEO of Debenhams.

A late UK newsflash: Sports Direct has announced it is considering making a cash bid for Debenhams, the troubled department store chain.

In a statement to the City, Sports Direct says the offer would be better than Debenham’s current debt restructuring plan.

Mike Ashley’s retail group says:

• It would allow Debenhams shareholders who wish to realise their shareholdings the opportunity to do so
• Sports Direct would seek to run the Debenhams business for the benefit of all of Debenhams stakeholders rather than for the benefit of Debenhams existing lenders
  
• Debenhams current restructuring and refinancing process could result in “no equity value for Debenhams current shareholders”.
  

This is the latest twist in the ongoing row between the two firms - with Sports Direct now owning almost 30% of Debenham’s shares (which are now worth just 1.5p, down from 50p two years ago).

Wall Street is heading lower in late trading, with the Dow now down 90 points again.

Apple is the biggest faller, down 1.8% as it announces a new streaming service, games offering and credit card.

Chipmaker Intel is next, down 1.45%, followed by Walgreens Boots (-1.3%) and JP Morgan (-1.25%).

On the other hand, at least US and UK government debt offer a rate of interest.

More and more sovereign bonds are trading with negative yields, meaning investors are guaranteed to not get all their money back:

US government bond yields are also continuing to drop, providing more fuel for those concerned the yield curve is inverting [explainer here]

However..... Rick Rieder of investment giant BlackRock doesn’t agree that it heralds a recession.

Back in the bond market, the yield on UK government debt has hit its lowest level since autumn 2017.

Reuters has the details:

Brexit worries pushed Britain’s 10-year government bond yield below 1 percent for the first time in 18 months on Monday as the country’s still uncertain departure from the European Union added to concerns about global economic growth.

The 10-year gilt yield fell 3 basis points on the day to 0.981 percent, the lowest level since Sept. 8 2017.

In some ways, that’s good news for the government - it means it’s cheaper to borrow in the financial markets. But unfortunately, it’s also a sign that investors are more pessimistic about growth prospects, both in the UK and abroad.

European stock markets have closed for the day, with their second straight session of losses.

The FTSE 100 has ended the day down 30 points, or 0.4% at 7,177, an eight day low.

Germany’s DAX did better, thanks to the pick-up in business confidence, finishing 0.15% lower at 11,346.

With France’s CAC shedding 0.2%, the Europe-wide Stoxx 600 lost 0.45%

After a choppy morning’s trading, the US stock market is back where it started. The Dow and the S&P 500 are both flat, although the Nasdaq is still lower (-0.2%).

Europe is still nursing losses, with the FTSE 100 down 40 points (-0.6%) in late trading.

Fiona Cincotta, analyst at City Index says the inversion of the yield curve for US government debt has worried traders:

The yield of the 3-month treasury topping its 10-year counterpart is often considered a warning for a recession. The last time this happened was pre the financial crisis in 2007. With recession warnings sounding, traders are growing increasingly nervous.

There is a definite uneasiness surrounding the state of the global outlook, which investors just can’t shake off. As a result, demand for risker assets has fallen sharply and we are seeing increased flows into safe havens, such as the Japanese yen and gold.

Time for a quick recap.

Anxiety over the slowing global economy, and warning lights flashing in the US bond markets, are weighing on stock markets today.

Asian investors have rushed to sell shares, catching up with last Friday’s chunky selloff in Europe and America. Japan’s Nikkei was the standout victim, shedding 3% in its worst day of the year.

Investors pointed to weak economic data in recent days, including a glut of disappointing eurozone factory reports released on Friday.

European stock markets have posted fresh losses, with the FTSE 100 currently down 53 points or -0.75% at 7154.

In New York, the Dow Jones industrial average has hit a two-week low, with banks and tech firms among the fallers.

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The sell-off is being partly driven by a sharp fall in the yields, or interest rate, on longer-dated US government bonds. This has caused the US yield curve to ‘invert’ -- meaning investors no longer get a better rate of return for holding long-maturity bonds.

That matters...because an inverted yield curve suggests slower growth, or even a recession, looming

Economist Ted Bauman explains:

For forecasters, inverting yield curves have about the same significance as voodoo cursed totems for followers of that religion. That’s because they have preceded the last seven official U.S. recessions. They are therefore not to be taken lightly.

The oil price is also weaker today; Brent crude has lost 0.5% to $66.68 per barrel, on fears of slower global growth.

A new survey of German confidence brought some relief, with bosses saying they’re more confident about business conditions. However, German manufacturers continue to struggle, as Brexit uncertainty and trade war fears bite.

Anxiety over a global slowdown has pushed the US Dow Jones industrial average to a two-week low:

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Back in New York, the sell-off is gathering pace.

The Dow is now down 93 points, or 0.4%, at 25,409, adding to the 460-points lost on Friday.

Back in London, the FTSE 250 index of mid-sized firms just hit a new six-week low, down 1.1% today.

Brexit anxiety can take the blame, along with worries about the global economy.

The sell-off deepened as the DUP Party announced that it still opposed Theresa May’s Withdrawal Agreement, meaning little chance that the third Meaningful Vote on the deal will go better than the first two.