Donald Trump indicated by a tweet that he will once again increase tariffs on Chinese goods. There has been no progress in the talks that started this week and Chinese media are now saying that a deal is further away rather than closer.
Further interest rate cuts are now priced in for September and December as trade discord is likely to have a longer lasting impact.
Asian markets fell heavily after the DOW Jones fell 280 points yesterday. The Hang Seng is lower by 624 points and the Nikkei235 by 527 points. Opening calls for the FTSE and DAX look equally bleak but weakness in sterling will offset some of the decline in the FTSE.