Investors bailed out of stocks overnight as the trade war of words escalated. Major European and US indices finished down around 1%. Comments from analysts that the impact on growth would be minimal failed to support risk appetites, and key industrial commodities such as oil, iron ore and copper plunged. The US dollar traded at two year highs against the Euro following careful comments from ECB president Mario Draghi.

Threats from the White House to increase the sanctions on US goods by $200 billion were met with accusations of blackmail from China. Market reactions were restrained by the fact that the first barriers will not come into effect until July 6, leaving room for further negotiations.

The worst affected markets are in China, where major market indicators yesterday slumped 3%-4%. However futures markets are pointing to a rebound across the Asia Pacific region, and US futures have turned positive since the close this morning. Lower local currencies could fuel any share market rallies.

Australian investors may hone in on Telstra’s announcement at its strategy presentation today. CEO Andy Penn announced 8,000 jobs will be cut, and 1 in 4 managers will leave the company. $2 billion in asset sales and a doubling down on the new 5G network may not be enough. Some investors think the Telstra patient needs radical surgery, and could view today’s measures as band-aids.