Recession fears hit Wall Street after grim China, German data

[August 14, 2019]  By Medha Singh

(Reuters) - Wall Street was set to open lower on Wednesday, as poor economic data from China and Germany put the focus back on the impact of a bruising Sino-U.S. trade war which is pushing some major economies toward the brink of recession.

The outlook for Germany's export reliant economy was also grim and Chinese industrial output growth cooled to a more than 17-year low, adding to headwinds for U.S. multinationals that rely on global demand.

The U.S. bond market showed red flags, with two-year Treasury yields rising above those for 10-year paper for the first time since 2007, pointing to the risk of recession.

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Wall Street's main indexes surged more than 1.5% on Tuesday after Washington delayed the introduction of tariffs on some Chinese consumer goods.

Futures pointed to a drop of about 1% at the open on Wednesday.

"It's almost as if global investors either don't buy the tariff delay as a sign of real progress in the U.S.-China trade war or have been too consumed by further evidence of global economic weakness to care," BMO Capital Markets strategist Stephen Gallo said.

At 7:00 a.m. ET, Dow e-minis <1YMcv1> were down 239 points, or 0.91%. S&P 500 e-minis <EScv1> were down 25.5 points, or 0.87% and Nasdaq 100 e-minis <NQcv1> were down 75.25 points, or 0.97%.

Interest-rate sensitive lenders were among notable losers before the bell. Bank of America Corp <BAC.N>, Citigroup Inc <C.N>, JPMorgan Chase & Co <JPM.N>, Goldman Sachs <GS.N>, Wells Fargo & Co <WFC.N> and Morgan Stanley <MS.N> were all down between 1.5% and 2.4%.

Tariff sensitive chipmaker, which staged a comeback a day earlier, were also down. Micron Technology Inc <MU.O>, Broadcom Inc <AVGO.O> and Nvidia Corp <NVDA.O> among others slipped more than 1%.

(Reporting by Medha Singh in Bengaluru; Editing by Anil D'Silva)

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