Investors continue to fret about the growth outlook. The impact of the trade war is beginning to be felt and the recent escalation, caused by Trump's move to lift Chinese tariffs to 25%, compounds the issue. Even though economists predict that the economic effects of the dispute should be mild, the pain is appearing across important sectors of the S&P 500. While the first quarter US GDP print was strong at 3.2%, this may have been flattered by a low deflator reflecting the delayed response to the collapse in the oil price in Q4. Remember, the economy is still supposed to be benefitting from the effects of last year's stimulative package and this will soon start to wane. Some of the leading indicators such as the PMI/ISM have weakened (albeit from high levels) although consumer confidence remains buoyant.

Today's supply chains are complex and international, industrial businesses in places like Japan and Germany have felt the consequences of the US-China trade dispute. For instance, the German manufacturing PMI slumped to 44.1 in May, a fifth consecutive month that the index has indicated contraction. Global freight indices reflect this slowdown in trade.