The pan-European Stoxx 600 closed provisionally down 1.9%, with all sectors and major bourses trading firmly in the red.
European Markets: FTSE, GDAXI, FCHI, IBEX
This weighed on the rest of the bloc, with euro zone GDP growing by just 0.2% quarter-on-quarter, a significant slowdown from the 0.4% growth reported in the first three months of the year.
Recession worries were further compounded as the U.S. 2-year and 10-year Treasury yield curve inverted for the first time since 2007. An inversion in the yield curve — which occurs when shorter-dated bond yields rise above longer-dated rates — has traditionally been interpreted as a warning sign of an impending recession.
European bond yields followed U.S. Treasuries downwards to hit new record lows. Both 10-year and 30-year German bond yields fell to all-time record lows, along with French 10-year yields. Meanwhile the gap between U.K. 2-year and 10-year gilts inverted for the first time in over a decade.
On Wall Street, stocks dived as equity investors reacted to the bond market moves. The Dow Jones Industrial Average fell 600 points, while the Nasdaq Composite and S&P 500 indexes were both sharply lower.
The delay affects around half of the remaining $300 billion in Chinese imports, which includes cellphones, laptops and other consumer goods. President Trump said the delay is intended to dampen any potential impact on U.S. holiday sales.
The Chinese yuan has also been in focus during recent escalations of the trade war, and the People’s Bank of China on Wednesday set the official midpoint reference for the currency at 7.0312 per dollar, stronger than expected but above the psychological 7 per dollar barrier for the fifth consecutive session.
Stocks to watch
Shares of steel and mining giant Arcelormittal meanwhile were down 8%, tumbling close to the bottom of the Stoxx 600 and erasing the boost enjoyed after the U.S. tariff announcement on Tuesday.