Sydney/New York: US stock futures climbed and Asian equities came off their lows at the open of trading on Wednesday after China officially echoed President Donald Trump’s optimism over bilateral trade talks.

After a big sell-off Tuesday on Wall Street, stocks in Australia, Japan and South Korea were still down, though by less than the 3.2% tumble in the S&P 500 Index. The 10-year Treasury yield fell to 2.91%, signalling bond traders are increasingly worried about the outlook for growth. Financial shares sank as the yield curve continued to flatten. Adding to the risk aversion overnight was news that UK Prime Minister Theresa May’s push to avoid a so-called “hard Brexit" may be at risk.

“It’s the markets really trying to reprice and reset growth rates for next year," Darrell Cronk, Wells Fargo Investment Institute president, told Bloomberg TV in New York. “It’s a confluence of three events: Concerns about trade, what will happen with Brexit and heightened concerns about a hard landing after what happened in the U.K. parliament, and the yield curve" and its potential to invert, he said.

The breach of a key technical level for US stocks saw losses accelerate on increased volume after futures on the S&P 500 dropped below their 200-day moving average.

President Donald Trump suggested Tuesday that he could extend a 90-day truce in his trade war with China, while his top White House economic adviser backtracked from the president’s announcement that Beijing had agreed to reduce tariffs on US-made cars. The developments again called into question the extent of a trade agreement the White House said Trump had struck with Chinese President Xi Jinping over dinner at the Group of 20 summit on Saturday.

US growth concern is causing some traders to bet that the Fed will cut interest rates as soon as 2020. The swaps market has brought forward the timing for when it sees the hiking cycle peaking, toward the end of 2019 or early 2020, a period when the Fed’s own projections indicate tightening will still be under way.

Elsewhere, oil fell as doubts about Opec’s appetite for production curbs exacerbated signs of swelling American surpluses. The yield on benchmark Japanese 10-year bonds fell to the lowest since July.

Bloomberg’s Luke Kawa, Vildana Hajric and Sophie Caronello contributed to this story.

This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.

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