US: Wall St opens lower amid global growth risks

[NEW YORK] Wall Street opened lower on Wednesday as Brexit-related fears seeped back into the markets amid signs of a global economic slowdown.

As wary investors looked for shelter, gold rallied to a two-year high. The benchmark 10-year US Treasury yield touched a record low.

Major Asian and European indexes were trading lower. The British pound was at a 31-year low, while China allowed the value of the yuan to touch a 5-1/2 year low.

"Today's decline is not a surprise as investors have had a chance to take a step back and look at things and go, 'Well maybe it's not all that good'," said Paul Nolte, portfolio manager at Kingsview Asset Management. "We are not yet calling for a recession, but I think the risks of a recession are starting to rise." Mr Nolte said.

Global markets recovered some losses stemming from the Brexit vote last week, but weak economic data and worries over the fallout of the decision curtailed the rally.

US Federal Reserve Governor Daniel Tarullo said world financial markets are well prepared for the impact of Brexit and that they are behaving well.

The Fed will release the minutes of its June meeting at 2:00 pm ET (1800 GMT). Traders will peruse the comments for clues on what the central bank thought the impact of Brexit would be.

Foreign exchange volatility and economic uncertainty after the Brexit vote have also imperiled a projected profit rebound in quarterly results in the United States. Second-quarter earnings are forecast to decline 3.9 per cent from a year ago.

Oil prices edged lower on Wednesday, due to a stronger dollar and increasing concerns about weak demand.

At 9:35 am ET, the Dow Jones Industrial Average was down 78.41 points, or 0.44 per cent, at 17,762.21.

The S&P 500 was down 9.64 points, or 0.46 per cent, at 2,078.91.

The Nasdaq Composite was down 28.04 points, or 0.58 per cent, at 4,794.86.

Nine of the 10 major S&P indexes were lower. Financials weighed on the index the most.

Citigroup and Bank of America were down more than 1.5 per cent, while JPMorgan was down about 1 per cent.

Goldman Sachs' 1.2 per cent decline dragged the Dow the most.

The defensive utilities was marginally higher.

Data showed US trade deficit widened more than expected to US$41.1 billion in May as rising oil prices helped push up the import bill and exports remained constrained by a strong dollar. Economists had expected the trade gap to be about US$40 billion.

A report at 10:00 am ET is expected to show the Institute for Supply Management's non-manufacturing index rose to 53.3 in June from 52.9 in May.

Tesla's shares were down 1.9 per cent at US$209.91 amid continuing concerns about the electric car maker's self-driving technology after a fatality on May 7.

Declining issues outnumbered advancing ones on the NYSE by 1,989 to 653. On the Nasdaq, 1,582 issues fell and 631 advanced.

The S&P 500 index showed 26 new 52-week highs and two new lows, while the Nasdaq recorded 17 new highs and 20 new lows.

REUTERS