By Paul J. Davies
-- German government bond yields hit a record low
-- S&P 500 futures slip 0.5%
-- Japan's Nikkei up 1%
U.S. stock futures slipped on Wednesday after Tuesday's rally on Wall Street, even as Asian stocks were lifted by the White House abruptly changing course to delay tariffs on Chinese imports.
European indexes also were down as data showed the German economy shrank in the second quarter.
The Trump administration on Tuesday postponed plans for new tariffs until December, sending U.S. indexes higher. Stocks in Asia followed suit, with shares in Shanghai up 0.4% and Japan's Nikkei up 1%.
Hong Kong's Hang Seng was up nearly 0.1% as the city continued to struggle with protests and violence.
The declines in European stocks came after data showed Germany's economy contracted by 0.1% in the second quarter due to further declines in exports.
The Stoxx Europe 600 was down 0.5%, while the German DAX dropped 0.8%.
The year-over-year German GDP growth of 0.4% in the quarter was better than expected, but the latest data mean that average quarterly growth has been zero since the third quarter of 2018, according to ING.
Should GDP fall again in the third quarter, that would put Germany into a technical recession, said Nadia Ghabari, an economist at Pictet Wealth Management. The data put pressure on the German government to stimulate the economy through tax cuts or public spending.
"Right now the key question [for Germany] is just how much can the domestic demand offset international contraction," Ms. Ghabari said.
Government bond markets showed continuing signs of caution with the yield on the 10-year German bond touching a fresh record low of minus 0.628%, according to Tradeweb. Bond yields and prices move in opposite directions.
The debilitating effect of trade tensions also was visible in Chinese data, as value-added industrial production in the country grew 4.8% in July, significantly lower than the 6.3% increase in June and below expectations of 5.9% growth.
Still, Asian stocks rallied on the tariff delay, which came amid concerns about the costs to American consumers during the holiday shopping season. The tariff reprieve lifted S&P 500 1.5% on Tuesday, but U.S. futures were down slightly Wednesday morning with the S&P 500 contract down 0.5%.
The delay helped put off concerns that the U.S.-China trade war would have knock-on effects for consumers and domestic demand, although they haven't gone away completely.
"The bar for an actual recession is very, very high [in the U.S.]," said Geoff Yu, head off U.K. investment office at UBS Wealth Management. "For asset allocators it's still a case of hope for the best but prepare for the worst."
In commodities, gold prices edged down 0.2%, while Brent crude oil prices dropped 0.9% to $60.77 a barrel, pulling back from Tuesday's near 5% rally.
Write to Paul J. Davies at firstname.lastname@example.org