Tensions between China and the US deepen as both countries impose fees on each other’s ships, alarming investors. The dispute escalates despite President Trump’s social media assurance, “Don’t worry about China, it will all be fine!”
European stock markets opened lower on Tuesday, following a Wall Street rally sparked by Trump’s earlier reassurances about US-China relations. Investor confidence remains weak as the two largest economies clash over trade.
Both governments began charging vessel fees on Tuesday. The US levies $50 (€43.27) per tonne of Chinese cargo, while China imposes 400 yuan (€48.65) per tonne, with gradual increases expected.
Beijing also sanctioned five US-linked subsidiaries of South Korea’s Hanwha Ocean, asserting greater control over maritime trade.
Although the status of trade negotiations remains uncertain, Trump said he may still meet Chinese leader Xi Jinping later this month at a regional summit.
Over the weekend, Trump threatened 100% tariffs on Chinese goods, then softened his tone online, calling Xi “highly respected” and claiming both nations wanted to avoid economic depression.
Investors in Europe also watch domestic politics closely. In France, Prime Minister Sébastien Lecornu will address parliament at 15:00 CEST, seeking to stabilize politics and pass a budget to curb the national deficit.
In the UK, unemployment rose to 4.8% in the three months to August, heightening concern about the economy’s strength.
European and US Markets Slide Despite Optimism
By midday in Europe, the FTSE 100 in London fell 0.38% to 9,406.64. The CAC 40 in Paris dropped 0.76% to 7,874.20, and Frankfurt’s DAX lost 0.87%, reaching 24,176.42.
The STOXX 600 slid 0.71%, while Madrid’s IBEX 35 slipped 0.2% to 15,511.00.
EasyJet shares surged nearly 5% despite MSC denying takeover rumours. “Investors now speculate on potential buyers,” said Dan Coatsworth of AJ Bell, explaining the stock’s continued rise.
Across the Atlantic, Dow Jones futures fell 0.8%, S&P 500 futures dropped 0.94%, and Nasdaq futures declined 1.23%. Rare earth companies gained strongly as trade tensions intensified. Critical Metals soared over 33% in premarket trading, USA Rare Earth rose 9%, and MP Materials climbed 6%.
Currency movements also reflected market anxiety. The euro and pound weakened against the dollar, while the Japanese yen strengthened.
Oil prices plunged, with US crude down over 2% to $58.25 and Brent slipping below $62, losing about 2%.
Gold and silver prices spiked as investors sought safe havens. Gold reached $4,156.80, rising 0.58%, while silver hit a record above $52 before easing to around $50.
Cryptocurrencies dropped sharply. Before noon in Europe, Bitcoin fell 3.5% to $111,801, and Ethereum lost 6.4%, trading at $4,006.49.
Global Traders Brace for Corporate Earnings
Market sentiment remains fragile amid fears of an AI-driven market bubble. Analysts warn that soaring tech valuations far exceed corporate earnings growth.
Critics argue that US stocks now appear overvalued, echoing patterns from the 2000 dot-com collapse.
Investors brace for a critical earnings season, with major firms like JPMorgan Chase, Johnson & Johnson, and United Airlines set to report results this week.
The reports will test market confidence as global traders navigate trade disputes, inflation risks, and fears of another speculative bubble.
