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Danske Bank analysts note that over the weekend a new round of planned tariff increases in the US and China came into effect, raising the stakes in the trade war and the likelihood of further adverse repercussions on global growth and confidence.

Key Quotes

“While the US imposed a duty of 15% on USD110bn of consumer goods ranging from footwear to apparel and tech products, China commenced with stage one of retaliatory tariffs on USD75bn of US imports.”

“The outlook for the Chinese manufacturing sector already deteriorated in August with the official PMI falling to 49.5 this morning. Given the low prospects for a trade deal, we expect further weakness in manufacturing PMI in the coming months. It remains to be seen whether face-to-face talks between American and Chinese negotiators will still take place in September after the latest escalation round.”