China and the US continue to escalate their trade conflict, alarming global investors. Both countries have imposed new fees on each other’s ships, opening another front in their economic dispute. President Trump tried to ease concerns on social media, writing, “Don’t worry about China, it will all be fine!”
European markets opened lower on Tuesday despite Monday’s Wall Street rally after Trump’s reassurances about US-China relations. Investors remain uneasy as the world’s largest economies clash over trade.
Both nations began enforcing reciprocal shipping fees on Tuesday. The US placed a $50 (€43.27) per tonne fee on Chinese vessels in American ports, while China introduced a 400 yuan (€48.65) per tonne levy, set to rise gradually.
Beijing also sanctioned five US-linked subsidiaries of South Korean shipbuilder Hanwha Ocean, tightening its grip on global shipbuilding.
Trade negotiations between Washington and Beijing remain uncertain. Trump said he might still meet Chinese President Xi Jinping later this month at a regional summit.
Over the weekend, Trump threatened China with 100% tariffs before softening his tone online, calling Xi “highly respected” and saying, “The USA wants to help China, not hurt it!”
European Markets Fall Amid Political and Economic Strain
European investors stayed cautious as France’s new prime minister, Sébastien Lecornu, prepared to address parliament at 15:00 CEST. He plans to stabilize the country’s politics by passing a budget to address its large deficit.
In the UK, unemployment rose to 4.8% in the three months to August, stoking fears about the economy’s health.
By midday, London’s FTSE 100 dropped 0.38% to 9,406.64, Paris’s CAC 40 fell 0.76% to 7,874.20, and Frankfurt’s DAX slipped 0.87% to 24,176.42. The European STOXX 600 lost 0.71%, while Madrid’s IBEX 35 decreased 0.2% to 15,511.00.
In corporate updates, EasyJet shares surged nearly 5% amid rumours of a takeover by shipping giant MSC. MSC denied any deal, but speculation kept the airline’s shares elevated.
“Investors will now question who might buy EasyJet,” said Dan Coatsworth, head of markets at AJ Bell. “That explains why the shares remain high despite MSC’s denial.”
Across the Atlantic, Dow Jones futures dropped 0.8%, S&P 500 futures lost 0.94%, and Nasdaq futures fell 1.23%. Meanwhile, US rare earth companies surged as the trade fight intensified. Critical Metals rose over 33%, USA Rare Earth gained 9%, and MP Materials advanced 6%.
The euro and British pound weakened against the dollar, while the yen strengthened. Oil prices tumbled, with US crude dropping over 2% to $58.25 and Brent sliding below $62.
Gold and silver soared as investors sought safe havens. Gold climbed 0.58% to $4,156.80, while silver reached a record above $52 before easing to $50.
Cryptocurrencies plunged. Before noon, Bitcoin fell 3.5% to $111,801, and Ethereum dropped 6.4% to $4,006.49.
Markets Brace for Key Earnings as AI Bubble Fears Grow
Global markets face fresh pressure from fears of an AI-driven stock bubble. Analysts warn that tech valuations have surged faster than company earnings, echoing the buildup to the 2000 dot-com crash.
Critics argue that the US market looks overpriced after months of rapid gains. Investors now await major corporate results that could reshape sentiment. JPMorgan Chase, Johnson & Johnson, and United Airlines will report earnings this week, offering clues about the market’s direction.
