US stocks are falling after equities crashed on Wednesday over recession fears.

The Dow fell 800 points on Wednesday, with the S&P 500 and Nasdaq both falling roughly 3%.

Stocks continued to tumble Thursday after China vowed to take counter measures against the US in a trade war escalation.

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US stocks are falling on Thursday morning, after China vowed to take counter measures against the US over the latest round of 10% tariffs

China has to take necessary counter-measures to the latest US tariffs on $300 billion of Chinese goods, the finance ministry said on Thursday,Reuters reported.

The ministry also said the US tariffs violate a consensus reached by leaders of two countries and get off the right track of resolving disputes via negotiation, Reuters added.

This does bode well and may encourage Trump to react there is a chance he could bring forward all the tariffs to September 1, said Neil Wilson, Chief Market Analyst at .

Countermeasures suggests China is not interested in the delay to tariffs and may have sniffed a weakness in the US position and is keen to exploit it. Retaliation by China means escalation in tensions, and diminishes the chances of a positive outcome in the near term. Risks are still to the downside. As ever, though, only a tweet away, Wilson added.

On Wednesday, equities suffered their worst night of the year, with the Dow Jones losing 800 points in single afternoons trading.

Stocks dropped on fears of a recession, as the spread between 2 and 10 year treasury yields fell below zero a sign that recession could be on the horizon.

The yield on US 30-year bonds also fell to a new low, below 2% for the first time ever, once again signalling a shrinking economy.

While investors may still make an annual return of 1.98% for holding 30-year bonds until maturity, when taking inflation into consideration they may end up with negative real returns, according to Hussein Sayed, Chief Market Strategist at FXTM. Thats a terrible situation for pension funds and some insurance companies who are obliged to have exposure to long duration bonds.

Meanwhile, the global economic slowdown continued on Wednesday with both Germany and China reporting poor results.Germanys economy contracted in the three months to June, while industrial production in China fell.

Heres how markets look at 9:45 am in New York:

US equities are falling, with the S&P 500 flat and the Nasdaq down 0.3%.

European markets opened marginally higher but shot down after Chinas announcement, with the German Dax down 1.1% and Euro Stoxx 50 0.7%.

Asian markets closed mixed, with the Nikkei 225 falling 1.2%, while the Shanghai Composite rose 0.3% and the Hang Seng 0.8%.

Markets in Italy, Austria and Greece are shut for public holidays.

Oil markets continued to be battered by trade war uncertainty with WTI down 0.3% and Brent Crude down 0.6%.

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US stocks dropped around the world after China vowed to take counter measures against the USs latest round of tariffs