Despite solid US retail sales shares globally struggled to make gains in overnight trading. Another slump in oil prices and a significant miss from Netflix weighed on markets. Bond markets sold off but currencies marked time as the world waits for the next trade shoe to drop.

The IMF and the Australian Treasurer both warned of the risks of a trade war, joining a growing chorus of concern. Weakness in key industrial commodities suggests growth fears, yet the steepening of interest rate curves points to inflation worries – a worst of all worlds economic scenario. Stock markets are looking increasingly isolated in their higher levels, and are potentially vulnerable to a single pronouncement from Washington, Beijing or Brussels.

Macro data continues to underpin investor confidence. In the last 24 hours China GDP and US retail sales confirmed a solid global outlook. Risk are around valuations, and Netflix demonstrates the potential portfolio impacts. In Q2 Netflix added 5.2 million subscribers, a million less than expected. Heading into the quarterly profit announcement it was trading on around 100 times earnings. In afterhours trading it is down 15%. Investors may be combing portfolios for similarly rosy valuations.

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