Asian markets tumble on recession fears, Nikkei slides 3% - MarketWatch

Shares tumbled in Asia on Monday after Wall Street ended last week with a broad retreat, while Thailand’s market saw a moderate loss following a general election that appeared likely to keep the incumbent, junta-backed prime minister in power.

Japan’s Nikkei 225 stock index NIK, -3.01% skidded 3.1%, while the Shanghai Composite index SHCOMP, -1.97% declined 1.4%. The Hang Seng in Hong Kong HSI, -2.12% lost nearly 2% and South Korea’s Kospi SEU, -1.92% declined 1.8%. The S&P ASX 200 XJO, -1.11% gave up 1.1%.

Investors are looking ahead to China-U.S. trade talks that are due to resume Thursday in Beijing.

On Friday, the closely watched yield curve inverted, a key indicator of a potential U.S. recession. That sent global bonds yields plunging. Weak economic data from Europe added to fears of a global economic slowdown. Investors are also awaiting China-U.S. trade talks that are due to resume Thursday in Beijing.

Thailand’s SET SET, +0.75% rose 0.8%. A military-backed party prevailed in the country’s first election since a 2014 coup, after tilting the electoral system in its favor. The outcome is likely to add to nearly two decades of political instability in Thailand.

The preliminary results raise the likelihood that Prayut Chan-ocha, will stay on as prime minister with backing from a coalition.

“However, the transition to the new government may not be smooth,” Sian Fenner of Oxford Economics said in a commentary.

“It is unlikely that any party will win a clear majority and potential friction between political parties and the military could lead to economic activity being significantly disrupted,” Fenner said.

The wave of selling knocked 460 points off the Dow Jones Industrial Average DJIA, -1.77% and gave the benchmark S&P 500 index SPX, -1.90% its worst day since Jan. 3. The Russell 2000 index RUT, -3.62% of smaller company stocks fell more than the rest of the market as traders shedded risker assets.

Worried investors shifted money into bonds, which sent yields much lower. The yield on the 10-year Treasury TMUBMUSD10Y, +0.14% dropped to 2.43 percent from 2.54 percent late Thursday, a big move.

Wall Street, which posted losses around 2% on Friday, looked set to continue losses Monday — Dow futures YMM9, -0.50% were last down more than 100 points, and S&P 500 futures ESM9, -0.47% and Nasdaq futures NQM9, -0.79% were sinking as well.

Among individual stocks, SoftBank 9984, -5.01% fell in Tokyo trading, along with Fast Retailing 9983, -2.43% and Toyota 7203, -2.12% . Tencent 0700, -3.51% tumbled in Hong Kong, as did CNOOC 0883, -4.68% and AIA Group 1299, -2.08% . Samsung 005930, -2.26% and SK Hynix 000660, -4.20% slid in Korea, and BHP BHP, -1.28% and Beach Energy BPT, -5.58% fell in Australia.