China retaliates as US imposes 25% taxes on another $16bn worth of imports

Here are the opening calls for the European markets:

European Opening Calls:#FTSE 7562 -0.16%#DAX 12365 -0.17%#CAC 5418 -0.05%#MIB 20679 -0.10%#IBEX 9566 -0.15%

Weaker tone across European stock indices as fresh round of US-China tariffs kick in. #Trump issues continue to weigh #FTSE called 20 lower

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Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

The bull run in the US market may have broken a new record on Wednesday, but investors have plenty to be nervous about at the moment.

The US-China trade spat continues as representatives from both countries engage in low level talks in the US. The tit-for-tat tariffs conflict continues as both sides will impose tariffs on $16 billion worth of each other’s goods today. The monetary size is small but the gesture is big, and traders will be eyeing developments.

There has been a lot of negative news on Trump over the past 36 hours; the job of markets will now be to decide whether Trump can ride the storm, or whether the double blow is likely to damage the Republican Party’s election prospects at the mid terms in November and result in the extension of a criminal investigation, which is already overshadowing Trump’s Presidency. The reality is that the market’s reaction so far has been limited and contained, suggesting that traders believe, at least for now, that Trump can move past this.

The flash manufacturing and services PMI reports from major eurozone countries will be in focus today. At 8.15am (UK time) France will release their numbers, and economists are expecting the manufacturing report to come in at 53.4, a slight improvement on July’s 53.3. The consensus estimate for the services report is 55.1, up from 54.9 last month. Germany will announce their figures at 8.30am (UK time) and traders are expecting a slight cooling in the manufacturing sector from 56.9 in July to 56.5. Economists are expecting the services report to be 54.3, and the July reading was 54.1.

The composite PMI is likely to edge up slightly in August, to 54.5 from 54.3 in the previous month (10:00 CET). We expect both the manufacturing and the services components to contribute to the headline reading. While a pickup in global trade activity during the second half of 2018, as indicated by our own global leading indicator, is likely to bolster sentiment of eurozone export-dependent manufacturers going forward, solid domestic fundamentals stemming from robust consumer spending and record-low unemployment should keep economic activity in the services sector well supported.

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Read More Markets nervous amid new US-China tariffs and Trump’s troubles – business live

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