Relations between the US and China continue to worsen as both countries impose shipping fees, unsettling investors. The new trade battle unfolds despite President Trump’s social media claim: “Don’t worry about China, it will all be fine!”
European markets opened lower on Tuesday despite Monday’s Wall Street rally, sparked by Trump’s assurances about US-China relations. Investor confidence remains fragile as the two largest economies escalate trade hostilities.
Both nations began charging fees on each other’s ships on Tuesday after Washington’s probe into China’s dominance in shipbuilding. The US set a $50 (€43.27) per tonne fee on Chinese vessels entering its ports. China responded with a 400 yuan (€48.65) per tonne levy that will rise over time.
Beijing also sanctioned five US-linked subsidiaries of South Korean shipbuilder Hanwha Ocean to assert control over its maritime industry.
The status of trade talks remains uncertain, but Trump said he may meet President Xi Jinping later this month during a regional summit.
Over the weekend, Trump first threatened 100% tariffs on Chinese goods before softening his tone online. He wrote that he respected President Xi and wanted to help, not harm, China’s economy.
European investors also remain cautious as France’s new prime minister, Sébastien Lecornu, prepares to address parliament at 15:00 CEST. Lecornu aims to restore political stability and pass a budget to reduce France’s deficit.
In the UK, unemployment rose to 4.8% in the three months to August, deepening concerns about Britain’s economic health.
Market Turmoil Spreads Across Europe and the US
By midday in Europe, the FTSE 100 dropped 0.38% to 9,406.64, the CAC 40 fell 0.76% to 7,874.20, and the DAX slid 0.87% to 24,176.42. The STOXX 600 declined 0.71%, while Spain’s IBEX 35 slipped 0.2% to 15,511.00.
In corporate news, EasyJet shares rose nearly 5% after takeover rumours involving shipping group MSC. Despite MSC denying the speculation, investors continued buying.
“Investors now wonder who might want to acquire EasyJet. That’s why shares remain high despite MSC’s denial,” said Dan Coatsworth, head of markets at AJ Bell.
Across the Atlantic, US futures declined. Dow Jones futures fell 0.8%, S&P 500 futures lost 0.94%, and Nasdaq futures dropped 1.23%.
Rare earth companies in the US surged as the trade conflict intensified. Critical Metals gained over 33% in premarket trading, USA Rare Earth rose 9%, and MP Materials added 6%.
The euro and the British pound weakened against the dollar, while the yen strengthened slightly.
Oil prices tumbled. US crude fell more than 2% to $58.25, and Brent slipped below $62, losing about 2%.
Gold and silver prices soared as investors sought safety. Gold climbed 0.58% to $4,156.80, while silver hit a record above $52 before easing to around $50.
Cryptocurrencies suffered sharp declines. Before noon in Europe, Bitcoin dropped 3.5% to $111,801, and Ethereum slid 6.4% to $4,006.49.
Investors Brace for Key Earnings Amid Tech Bubble Fears
Global sentiment remains tense as analysts warn of a potential AI-driven market bubble. Tech valuations have surged far faster than earnings, raising doubts about sustainability.
Critics argue that US stocks now look overpriced compared to corporate profits, echoing fears of a repeat of the 2000 dot-com crash.
The upcoming earnings season could set the tone for global markets. Major firms like JPMorgan Chase, Johnson & Johnson, and United Airlines will release financial results this week, giving investors fresh clues about the economy’s direction.
