On Wall Street, US stocks recovered from heavy losses earlier in the day sparked by fears about the trade war and the global economy
Apart from the ongoing tensions between the US and China, which escalated earlier this week from trade disputes to accusations of currency exchange rate rigging, traders were spooked when three central banks slashed interest rates in a sign that they lack confidence in global stability.
Regulators in India, New Zealand and Thailand all cut interest rates by more than was expected, underlining concerns about the world economy.
India’s reduction, the fourth in a year, cut lending rates to their lowest in nine years in an attempt to support the country’s faltering economy with growth and private investment.
The Reserve Bank of New Zealand slashed its rates by 25 basis points to a record low of 1 per cent as it warned that stimulus was needed to keep employment and inflation measures on target. The bigger-than-expected cut “does not rule out any further action” later in the year, added the reserve bank’s governor Adrian Orr.
A steep fall in German industrial production also raised fears that the eurozone’s largest economy may be heading towards its first recession for six years.
Official figures from Germany’s statistical office showed that production fell by 1.5 per cent in June, or 5.2 per cent year-on-year.
Carsten Brzeski, the chief economist for Germany at the broker ING, said the figures were “devastating, with no silver lining”.