Tensions between China and the US keep rising as both nations impose shipping fees, unsettling global investors. The fresh phase of the trade war unfolds despite President Trump’s social media assurance: “Don’t worry about China, it will all be fine!”
European markets opened lower on Tuesday, reversing Monday’s Wall Street rally that followed Trump’s attempt to calm concerns about relations with Beijing.
Investors remain uneasy as the world’s two largest economies continue to clash over trade policy. Both sides began applying new fees on each other’s ships on Tuesday, following a US probe into China’s growing shipbuilding dominance.
Washington placed a $50-per-tonne (€43.27) fee on Chinese vessels entering US ports. In response, Beijing imposed a 400-yuan (€48.65) levy per tonne on US ships, with plans to raise it steadily.
Also on Tuesday, China sanctioned five US-linked subsidiaries of South Korean shipbuilder Hanwha Ocean, seeking to tighten its control over global maritime influence.
Although trade talks remain uncertain, Trump said he might still meet Chinese President Xi Jinping later this month at a regional summit.
Over the weekend, Trump threatened 100% tariffs on Chinese goods before softening his tone online. He wrote that President Xi “had a bad moment” and insisted both nations want to avoid economic depression.
Investors Brace for Economic Headwinds in Europe
European investors stay cautious as France’s new Prime Minister Sébastien Lecornu prepares to address parliament at 15:00 CEST. He aims to restore political stability by passing a budget that tackles the country’s mounting deficit.
In the UK, unemployment rose to 4.8% in the three months to August, heightening fears about the nation’s economic resilience.
By midday, European indexes remained in negative territory. London’s FTSE 100 fell 0.38% to 9,406.64. Paris’s CAC 40 dropped 0.76% to 7,874.20, and Frankfurt’s DAX slipped 0.87% to 24,176.42.
The STOXX 600 declined 0.71%, and Madrid’s IBEX 35 lost 0.2% at 15,511.00.
EasyJet shares rose sharply after takeover rumours involving shipping giant MSC, despite MSC denying any talks. The carrier’s stock still traded nearly 5% higher by midday.
“Investors will now speculate about who might buy EasyJet,” said Dan Coatsworth, head of markets at AJ Bell. “That’s why shares remain elevated even after 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%. Rare earth companies in the US saw strong gains as trade tensions deepened. Critical Metals surged over 33%, USA Rare Earth gained 9%, and MP Materials climbed 6%.
The euro and the British pound weakened against the dollar, while the Japanese yen strengthened slightly.
Oil prices fell sharply. US benchmark crude dropped over 2% to $58.25, and Brent crude slipped below $62, down around 2%.
Gold and silver prices climbed as investors sought safe assets. Gold reached $4,156.80, up 0.58%, while silver briefly hit a record above $52 before retreating to around $50.
Cryptocurrencies plunged. Before noon in Europe, Bitcoin fell 3.5% to $111,801, and Ethereum dropped 6.4% to $4,006.49.
Market Uncertainty Builds Ahead of Key Earnings
Global investors now focus on corporate earnings amid growing anxiety over a potential AI-driven market bubble. The rapid rise in tech valuations has sparked fears that prices no longer reflect company performance.
Analysts warn that the US market looks overvalued after months of soaring prices disconnected from profit growth. Memories of the 2000 dot-com crash fuel nervousness as major firms prepare their reports.
JPMorgan Chase, Johnson & Johnson, and United Airlines will deliver earnings updates this week, giving investors fresh clues about the economy’s direction.
