The prospect of escalating protectionism depressed European and Asian stock markets on Wednesday, March 7, as President Donald Trump’s plans to punish foreign imports appeared to gather force. U.S. equity futures slumped, while most government bonds climbed.

The Stoxx Europe 600 Index headed for the first drop in three days as most of its 17 industry sectors retreated. Gauges in Asia also slid as investors mulled the implications of a stronger influence for protectionists in Trump’s administration after the resignation of economic adviser Gary Cohn, a free-trade proponent. News that the White House is considering clamping down on Chinese investments and imposing broader tariffs added to the gloom.

Bonds gained across Europe and the yen rose to its strongest level in almost 16 months. Oil fell as the trade-war fears sapped most commodities, and before industry data that’s expected to show U.S. stockpiles expanded.

Cohn’s resignation “shows that within the Trump administration the pendulum is swinging toward anti-trade,” said James Cheo, an investment strategist at Bank of Singapore. “What we should be watching out for is how other countries react in response to the tariffs.”

The prospect of U.S. trading partners retaliating with their own duties overshadowed a kind of detente with North Korea that helped underpin gains on Tuesday. Trump signaled that he’s open to talks with the country after Kim Jong Un’s regime told South Korean envoys he’s willing to consider denuclearization under certain conditions. South Korea’s won rallied.

Elsewhere, a benchmark contract for aluminum traded in London fell on Wednesday and held below its 2018 average closing price as traders weigh how a jump in U.S. tariffs on the metal would affect global prices. Gold and Bitcoin both slipped.

Here are some key events coming up this week:

The Chinese People’s Political Consultative Conference runs through March 15 and overlaps with the National People’s Congress meetings in Beijing, through March 20. The ECB isn’t expected to change policy on Thursday, but the Governing Council may discuss a change to pave the way for the end of quantitative easing. BOJ monetary policy decision and briefing on Friday. U.S. monthly payrolls data come Friday.

And these are the main moves in markets:

Stocks

The Stoxx Europe 600 Index declined 0.2 percent as of 9:33 a.m. London time. Futures on the S&P 500 Index sank 1 percent. The MSCI Asia Pacific Index dipped 0.6 percent. The MSCI Emerging Market Index fell 0.5 percent.

Currencies

The Bloomberg Dollar Spot Index gained less than 0.05 percent to 1,126.16. The euro advanced 0.1 percent to $1.2417, hitting the strongest in almost three weeks with its fifth straight advance. The British pound decreased 0.3 percent, the first retreat in a week. The Japanese yen advanced 0.5 percent to the strongest in 16 months on the largest gain in a week.

Bonds

The yield on 10-year Treasuries decreased three basis points to 2.86 percent. Germany’s 10-year yield declined one basis point to 0.67 percent. Britain’s 10-year yield fell two basis points to 1.521 percent.

Commodities

West Texas Intermediate crude fell 1.1 percent to $61.93 a barrel, the largest decline in a week. Gold declined 0.2 percent to $1,332.18 an ounce. LME aluminum sank 0.8 percent to $2,129.50 per metric ton, the lowest in more than three weeks. — Bloomberg

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