Shares, industrial metals and energy markets fell overnight as investors backed away from pro-growth exposures. The US dollar dropped and bonds rallied in a night of moves against dominant market trends. Asia Pacific markets are set to follow, although important data due today could short circuit selling.

The major concern for markets is looming trade havoc. The intended July 6 introduction of US tariffs on Chinese exports is a match that could spark a global market meltdown. While hope remains that the moves announced from Washington and Beijing are negotiating positions rather than concrete intentions, risks are high. Any escalation, or even a lack of news, could see further reduction in risk appetites.

Inflation data from Japan this morning is expected to show core inflation running at an annual rate of 0.7%. Markets are vulnerable to both positive and negative surprise on this number. The June economic survey from China is less likely to move markets but no less important to the regional outlook.

Futures trading at the New York close is pointing to opening losses of 0.5% to 1% in this time zone. Previous support from lower local currencies is off the table today after the US dollar index slipped 0.25% overnight. The simultaneous fall in gold prices indicates investors are not panicking – yet.