Stocks Fall, Yen Jumps as Trade War Fear Returns: Markets Wrap
(Bloomberg) — Stocks fell along with US and European equity-index futures, as a new round of retaliatory trade measures from China revived concern over tensions with Washington.
Contracts for the S&P 500 fell 0.7% and those for the Nasdaq 100 index tumbled 1% after China hit back at the US on shipping by imposing curbs on American units of Hanwha Ocean Co. Asian shares slipped 1.3% to their lowest level in more than two weeks. Japan’s Nikkei 225 index dropped 3%, with a political crisis also weighing. Cryptocurrencies also dropped.
The yen flipped its earlier losses and strengthened against the dollar. Gold tumbled in afternoon trading, reversing most of its gains from earlier in the day. That came alongside a sharp reversal in the price of silver, which had set an all-time high in morning trading. Treasuries rose with the yield on the benchmark 10-year sitting around 4.03%.
China’s latest move has raised concerns that the trade dispute may flare up again, jeopardizing the stock rally from April’s lows. US stocks had clawed back part of Friday’s losses — when tensions between Washington and Beijing rattled markets — signaling a renewed willingness by investors to buy the dip as a resilient economy and expected Federal Reserve easing outweighed fears of an AI bubble.
“Markets are shifting back into a risk-off mode after last week’s sharp swings,” said Billy Leung, an investment strategist at Global X Management. “The weakness looks more like fast-money repositioning than a fundamental turn as momentum is thin.”
Beneath the surface of recent market swings, investors are positioning for what some call the “debasement trade” — a longer-term repricing of assets as they seek protection from the risks posed by runaway budget deficits.
China imposed curbs on five US units of Hanwha Ocean in response to American probes against Chinese maritime, logistics, and shipbuilding industries. The company’s shares fell more than 7% in South Korean trading.
The Australian dollar led risk-sensitive currencies lower against the greenback while the nation’s bonds rallied.
China’s announcements reignited concerns that the trade war might flare up again after tensions between Washington and Beijing sparked a selloff in stocks on Friday.
Those worries had eased over the weekend after President Donald Trump signaled an openness to a deal with China. His administration also toned down its rhetoric after Trump had threatened tariffs of 100% on China in response to Chinese export controls.
“Risk sentiment remains fragile as cracks resurface across both equity and crypto markets,” said Hebe Chen, a market analyst at Vantage Markets. “The relentless record-breaking run in precious metals sends a clear message — investors are buckling up for the next storm.”
China and the US have been maintaining communication within the framework of the economic and trade consultation mechanism, and held working-level talks on Monday, the Chinese ministry of commerce said.
Earlier, US Treasury Secretary Scott Bessent said he still expects Presidents Donald Trump and Xi Jinping will meet. However, he warned that all options are open for retaliating against China’s move to tighten exports of rare earths. China had urged further negotiations to resolve outstanding issues.
On Tuesday, China reiterated that the export control measures on rare earth and other related items do not prohibit exports, and applications that meet the requirements will continue to be approved.
Corporate News:
Alphabet Inc.’s Google is planning to invest more than $10 billion in southern India to set up a 1-gigawatt data center, marking one of its biggest bets in a market that’s key to its global expansion plans. Rio Tinto Group’s third-quarter copper output jumped 10% from the year before, as the world’s second-biggest miner seeks to keep ramping up production of the metal that’s key to the energy transition. Apple Inc. is bringing its superthin iPhone Air to China after a pause that allowed local carriers to prepare for the eSIM-only device. Preorders start Oct. 17 after domestic carriers including China Mobile Ltd. won approval to support that feature. LG Electronics India Ltd. soared in its Mumbai trading debut after investors flocked to its initial public offering and made it the country’s most oversubscribed billion-dollar deal of its kind in 17 years. Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.6% as of 7:05 a.m. London time Nasdaq 100 futures fell 0.8% Futures on the Dow Jones Industrial Average fell 0.4% The MSCI Asia Pacific Index fell 1.3% The MSCI Emerging Markets Index fell 0.9% S&P 500 futures fell 0.6% S&P/ASX 200 futures rose 0.2% Japan’s Topix fell 2.2% Hong Kong’s Hang Seng fell 1.6% The Shanghai Composite fell 0.5% Euro Stoxx 50 futures fell 0.6% Currencies
The Bloomberg Dollar Spot Index was little changed The euro rose 0.1% to $1.1584 The Japanese yen rose 0.4% to 151.73 per dollar The offshore yuan was little changed at 7.1429 per dollar The British pound fell 0.1% to $1.3319 Cryptocurrencies
Bitcoin fell 2.6% to $112,772.34 Ether fell 4.6% to $4,093.39 Bonds
The yield on 10-year Treasuries was little changed at 4.03% Germany’s 10-year yield was little changed at 2.64% Britain’s 10-year yield declined two basis points to 4.66% Japan’s 10-year yield declined three basis points to 1.660% Australia’s 10-year yield declined six basis points to 4.23% Commodities
Spot gold rose 0.4% to $4,125.58 an ounce West Texas Intermediate crude fell 0.5% to $59.19 a barrel This story was produced with the assistance of Bloomberg Automation.
–With assistance from Winnie Hsu, Carmeli Argana and Abhishek Vishnoi.
©2025 Bloomberg L.P.
