In European Equity Markets the pan-European STOXX 600 index fell 1.3 percent, while Germany’s export-heavy DAX fell 1.5 percent. All European sectors were in negative territory, with those most exposed to action on tariffs taking the most points off the STOXX. Basic resources fell 3.3 percent and autos declined 1.7 percent. Burberry was down 4 percent after the luxury retailer’s first quarter update failed to impress investors, with no outlook hike. UK housebuilder Barratt Developments rose 3.5 percent after the company said that it expected profits to have risen 9 percent in 2018.

In Currency Markets the pound edged down from $1.33 on Wednesday as investors tried to gauge if the resignation of two ministers over Prime Minister Theresa May’s Brexit plans would affect an expected interest rate hike this summer. Sterling rose to as high as $1.3285 – roughly where it was on Friday before the resignations – before a rallying dollar knocked it back to $1.3248, down 0.2 percent on the day. Against the euro, sterling extended gains, spurred on by weakness in the common currency. The pound stood 0.2 percent stronger at 88.35 pence per euro.

In Commodities Markets oil futures pared losses briefly Wednesday after U.S. crude inventories fell the most in nearly two years, before trading lower in a volatile session in which supplies from Libya and Iran were expected to increase. U.S. crude stockpiles decreased by nearly 13 million barrels last week, while gasoline inventories also fell and distillate stockpiles rose, the EIA said on Wednesday. The decrease was the biggest since Sept. 2, 2016. Brent crude fell $1.84 to $77.02 a barrel, after touching $77.84 a barrel after the data was released.

In US Equity Markets stocks slid on Wednesday, led by industrial shares, after Washington’s threat to impose tariffs on an additional $200 billion worth of Chinese goods raised fears of an escalating trade war. The S&P industrials sector fell 1.21 percent, making it the biggest decliner and drag on the benchmark S&P. The S&P 500 was down 0.54 percent, at 2,778.64 and the Nasdaq Composite was down 0.55 percent, at 7,716.19. Fastenal’s shares rose 12.6 percent, the most on the S&P, after the industrial products distributor’s Q2 revenue and profit topped estimates.

In Bond Markets Germany’s 10-year bond yield rose to the day’s highs on Wednesday after a Reuters report that European Central Bank policymakers were split over when they might raise interest rates next year. German 10-year bond yields rose to a session high at 0.315 percent after the report and were only marginally down on the day, having traded 2.5 bps lower for much of the session. Spanish and Italian 10-year yields were 1-2 bps higher on the day, while the Portuguese equivalent was flat; all three had been 2-3 bps lower at one stage.