Global stock markets experienced a modest rebound as traders reacted to evolving dynamics in the US-China trade conflict. This recovery is attributed to the perception that intensified tensions may not escalate as drastically as anticipated.
US-China Trade Tensions
On Friday and through the weekend, former President Donald Trump threatened to impose additional tariffs of up to 100% on China starting next month. His accusations included claims that China was making “very hostile” moves to restrict exports of essential rare-earth minerals to the United States. Beijing has warned of retaliation if these tariffs are enacted.
Conversely, Trump and senior officials expressed a willingness to negotiate. In a post on Truth Social, Trump reassured investors, stating, “Don’t worry about China, it will all be fine!” He expressed confidence in Chinese President Xi Jinping, suggesting that both nations seek a cooperative rather than a confrontational path.
Market Reactions
- The S&P 500 index rose by 1.1%.
- The Nasdaq Composite index increased by 1.7%.
- In the UK, the FTSE 100 experienced a slight decline of 0.1% after an initial rise.
- European markets remained mostly stable, with the French Cac 40 index flat.
Amid these developments, major cryptocurrencies staged a recovery following a significant decline. Bitcoin increased by 0.3%, reaching over $115,000, while Ether rebounded to approximately $4,100 after dipping below $3,500.
The “Taco Trade”
Richard Hunter from Interactive Investor discussed a strategy called the “Taco trade,” which suggests that markets may rally based on expectations that Trump will retract aggressive tariff policies. This sentiment reflects a broader investment trend where uncertainty leads to a shift towards safe-haven assets like gold.
Gold Prices Surge
Gold reached new heights, with its spot price soaring to $4,078.5 an ounce on Monday, indicating increased investor interest in stability amid uncertain market conditions.
Derren Nathan from Hargreaves Lansdown highlighted that traders are anticipating a continuation of a trend where US indexes grow consistently, fueled by trade agreements and favorable economic indicators.
Chinese Trade Performance
Despite the ongoing trade tensions, China’s export figures showed an encouraging uptick. In September, exports surged by 8.3% year-on-year, surpassing analyst expectations of a 6% increase.
This growth represents the fastest pace since March and comes on the heels of a 4.4% increase in August, indicating that China is successfully diversifying its markets beyond traditional trade partners.
Global Market Sentiment
Investors remain cautious, particularly in Asia, where major markets experienced declines. Hong Kong’s Hang Seng index fell by 1.5%, and Taiwan’s market dropped by 1.4%. In mainland China, the Shenzhen exchange declined by 0.9%, while the Shanghai market slipped by 0.2%.
Comments from Chinese foreign ministry spokesperson Lin Jian reiterated the need for the US to rectify what he called “wrong practices,” asserting that China would take measures to protect its interests in the face of US tariffs.
