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(Bloomberg) --

Good morning. Tariffs are coming, the trade war is reverberating through markets and Europe's economy will get another health check. Here's what's moving markets.

The End of Calm

Those two tweets from President Donald Trump that rocked markets on Monday weren't just bluster: The top U.S. trade negotiator confirmed the U.S. plans to hike tariffs on Chinese goods this week, accusing China of backpedaling on commitments made during the talks. It's left Beijing struggling to know how to respond, traders raising rate-cut bets and has analysts on Wall Street questioning whether the tariffs are a tactic. The pattern of prior tweets and market moves suggest buying the dip. And it's admittedly easier to send stocks into a tailspin when markets have been on such a good run.

Pain Everywhere

The impact of Trump's trade tweets were felt far and wide. European stocks had been anticipating a quiet day with the U.K. closed for a holiday, but no such luck. Tech stocks were caught in the crossfire and recent IPO stars briefly suffered from the change in mood. Sweden's krona hit a decade low against the euro on a combination of the trade jitters and concerns about the health of the Swedish economy. The Turkish lira also tumbled on the risk-off swing and renewed worries about the Istanbul vote. Emerging markets were jolted into life ahead of a series of central bank decisions this week and a vote in South Africa, though the stage may be set for another recovery.

Health Check

European economic forecasts and German factory orders are both due. Given the trade worries are back in view, the health of Europe's economy will be in sharp focus, as will ongoing questions about where growth is going to come from with global export orders stagnant. Economic activity in the euro area at least showed some signs of stabilizing. The race to replace Mario Draghi atop the European Central Bank is hotting up too and raising suggestions that a change in the bank's mandate could also emerge. Still, the ECB may be put off by the skepticism that has met the Fed's drive to improve monetary policy and by its chief economist urging caution on such a path.

Assessing the Impact

Asian stocks were mixed as traders assessed the impact of the re-escalation in the trade war, with Korean and Japanese shares returning after holidays and sinking, while Chinese stocks recovered some of the losses suffered on Monday. The Australian central bank left rates on hold, defying expectations it could become the first developed central bank to enter an easing cycle and shifting that responsibility over to its neighbors in New Zealand.

Coming Up...

Beyond the stream of economic data we'll have comments from Bank of England and Federal Reserve officials, house price data from the U.K. and later the first set of results from ride-sharing firm Lyft Inc., one of the year's most notable IPOs. In Europe, the reporting season will also get under way for Italian banks, kicked off by Intesa Sanpaolo SpA and with its country counterparts all due to update as the week progresses. And already we've had brewing giant Anheuser-Busch InBev NV report earnings growth a little short of expectations.