Stocks Rebound as Trump Tempers China Trade Spat: Markets Wrap
(Bloomberg) — US stocks are poised to recoup some losses after President Donald Trump signaled that another tit-for-tat escalation in trade tensions with China isn’t inevitable, easing investor jitters after a sharp flare-up last week.
S&P 500 futures bounced 1.6% after the benchmark suffered its biggest drop since April on Friday. Contracts for the Nasdaq 100 rallied more than 2%. Treasury futures slipped, with cash trading in US bonds suspended for Columbus Day. Despite the calmer mood, the dash for the safety of gold persisted as the metal breached $4,070 an ounce to a fresh all-time high.
On a day marked by several market-moving events, French bonds held steady as President Emmanuel Macron unveiled a new cabinet to contain a growing political crisis. Silver, meanwhile, surged to its highest level in decades as a historic short squeeze in London amplified its powerful year-to-date rally. Cryptocurrencies bounced back following the weekend’s brutal selloff.
Big downward moves in risky assets have been a rarity of late, which may itself be a factor in the jarring reaction to trade tensions. Since the tariff-fueled meltdown in April, the S&P 500 has surged on optimism about AI and hopes for Federal Reserve interest-rate cuts. The gauge is trading near one of its highest valuations in 25 years — leaving a thin cushion for bad news.
“It doesn’t look like a replay of April, rather more like a back-and-forth pre-trade negotiation phase before the November deadline of the US-China truce,” said Anna Wu, a cross-asset strategist at Van Eck Associates Corp. “Markets are pricing in to a certain degree of overselling on Friday.”
After China unveiled wide-ranging global export controls on products containing even traces of certain rare earths this past week, Trump fired back by threatening to cancel a planned in-person meeting with Xi Jinping — their first in six years.
Trump said he would impose an additional 100% tariff on China as well as export controls on “any and all critical software” beginning Nov. 1.
China responded, saying the US should stop threatening it with higher tariffs and urged further negotiations to resolve outstanding trade issues. China also said it won’t hesitate to retaliate, should Washington persist in its measures against Beijing.
“Markets are now debating whether this latest tariff salvo will materialize,” Dilin Wu, a strategist at Pepperstone Group wrote in a note. “If it’s a negotiating ploy, the current pullback may prove a buy-the-dip opportunity. But if tariffs take effect, a fresh wave of volatility and global risk repricing could follow.”
On Sunday, the administration signaled an openness to a deal with China with Trump hinting at a possible off-ramp for Xi, while issuing a veiled threat that a full trade war would hurt China.
That suggests the US wants to keep up the pressure on China to reverse its most recent trade moves, while trying to reassure spooked markets that a tit-for-tat escalation isn’t inevitable.
“The history of Trump-Xi negotiations has been marked by cycles of escalation, followed by tactical truces, and the latest development could signal the start of a renewed cycle of escalation,” wrote Mark Haefele, chief investment officer at UBS Global Wealth Management. “The path for markets in the near term depends heavily on the path escalation takes.”
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 rose 0.6% as of 8:32 a.m. London time S&P 500 futures rose 1.6% Nasdaq 100 futures rose 2.2% Futures on the Dow Jones Industrial Average rose 1.1% The MSCI Asia Pacific Index fell 0.9% The MSCI Emerging Markets Index fell 1.2% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1610 The Japanese yen fell 0.7% to 152.32 per dollar The offshore yuan was little changed at 7.1390 per dollar The British pound fell 0.2% to $1.3337 Cryptocurrencies
Bitcoin rose 0.4% to $115,486.8 Ether rose 1% to $4,183.43 Bonds
The yield on 10-year Treasuries was little changed at 4.03% Germany’s 10-year yield advanced one basis point to 2.66% Britain’s 10-year yield was little changed at 4.68% Commodities
Brent crude rose 1.5% to $63.67 a barrel Spot gold rose 1.3% to $4,069.67 an ounce This story was produced with the assistance of Bloomberg Automation.
©2025 Bloomberg L.P.
