Equity markets have sold-off heavily this morning as investors are fearful we are entering a trade war. 

China are looking to impose tariffs on approximately $3 billion worth of US imports. It seems that Beijing are just testing the water with this relatively small retaliation. Traders don’t like the look of the political landscape, and they are seeking safe-haven assets such as gold.

Next shares are higher this morning after the company kept its outlook unchanged. The clothing retailer saw revenue fall by and 0.5% and profit drop by 8%. In the most difficult trading period for '25 years’, the clothing market was described as ‘weak’. The sector as a whole has had a tough time, as Zara and H&M revealed weaker figures recently. Next managed to keep its final dividend and profit forecast unchanged, and this boosted investor sentiment. The stock is up 7.1%

GlaxoSmithKline have pulled their bid for the healthcare unit of Pfizer. The announcement comes one day after Reckitt Benckiser withdrew its offer to buy the division. GlaxoSmithKline are still on the lookout for new acquisitions, but they must ‘meet our criteria for returns’. The stock is up 3.2%.

The US dollar index handed back some of the gains that were racked up yesterday. Now that China are looking to impose tariffs on US imports, traders are nervous this could be the beginning of a trade war. EUR/USD and GBP/USD are higher on the day due to the weakness in the US dollar. We are not expecting any major economic announcements from the UK or eurozone, so the US dollar is likely to the dominant player on the currency markets.

At 12.30pm (UK time) the US durable goods orders report for February is released, and the consensus is for growth of 1.5%, an improvement on the -3.7% decline in January.

We are expecting the Dow Jones to open down 142 points at 23,815 and we are calling the S&P 500 down 15 points at 2628.

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