Share and commodity markets deflated overnight as the reality of expanded trade barriers hit markets. Despite a long lead time for the additional US tariffs markets moved immediately to re-price the risk of a global slowdown caused by the intended embargoes. Better producer price data lifted the US dollar, and lower local currencies may soften investor selling today.

Energy markets were hit hard. Crude prices were down 7% in the overnight session, but regained some lost ground before the close. The slide came despite data that showed US inventories fell by more than twelve million barrels over the week – three times the estimate. Instead a crumbling demand picture and resumption of Libyan supply drove short term bulls from the market.

Bond markets were largely unmoved, and gold fell. These moves suggest investors have concerns about growth rather than fears for their economic safety. Market sensitivity to news flow is heightened. Any responses from China could spark another leg down for stocks, while any rapprochement could quickly stabilise sentiment.