Global markets ended the week  reeling  from the  latest escalation  in trade tensions between the US and China, after Donald Trump slapped a 10 per cent tariff on $300bn worth of Chinese goods. Equities, US bond yields and oil prices all tumbled, while China’s renminbi weakened to its lowest level this year. 

Few had expected last week’s round of trade talks — the first since a fragile truce struck in Osaka between Mr Trump and Xi Jinping — to yield immediate results. But investors were caught flat-footed by the suddenness of the tariff rise, with markets still digesting the implications of the Fed’s landmark cut earlier in the week.

Investors clearly think the news will raise growth worries at the Fed — expectations for a rate cut at the bank’s September meeting zoomed from about 60 per cent to more than 95 per cent, according to Bloomberg data.