Fears are heightening that the global economy could be on the brink of a recession as world markets plunged.

Panic gripped Wall Street today as investors dumped shares amid fears over a US-China trade war and the health of the global economy.

The three main stock markets closed 3%, with analysts pointing to signals the US may be heading for a recession.

Weak data from Germany and China, and another attack on the US central bank by President Donald Trump helped fuel a rush for haven assets like gold.

Analyst, Oliver Pursche, from Bruderman, says the global picture was precarious.

News that Germany’s GDP contracted in the second quarter, and that China’s industrial growth in July hit a 17-year low, had already spooked markets in Europe. 

The FTSE 100 closed down 1.5%, while in Germany and France the markets finished more than 2% lower.

Another fear was that the bond market was flashing recession warnings. 

The yield on two-year and 10-year Treasury bonds inverted for the first time since June 2007. 

This odd bond market phenomenon is seen as a reliable indicator of possible recession.