China and the United States escalate tensions by placing fees on each other’s ships, alarming global investors. President Trump posted on social media, “Don’t worry about China, it will all be fine!” yet markets remain uneasy.
European stocks opened lower on Tuesday, reversing Wall Street’s Monday rally, even after Trump’s reassurances about US-China relations.
Investor confidence continues to falter as both nations clash over trade policy. The world’s two biggest economies will start imposing reciprocal shipping fees on Tuesday. Washington will charge Chinese vessels $50 per tonne (€43.27) at US ports. Beijing will levy 400 yuan (€48.65) per tonne on American ships and increase the fee gradually.
China also sanctioned five US-linked subsidiaries of the South Korean shipbuilder Hanwha Ocean to reinforce its maritime dominance.
Although trade negotiations remain uncertain, Trump said he might still meet Chinese President Xi Jinping later this month during a regional summit.
Over the weekend, Trump threatened to impose 100% tariffs on Chinese goods before posting, “Highly respected President Xi just had a bad moment. He doesn’t want Depression for his country, and neither do I. The USA wants to help China, not hurt it!!!”
Europe and the UK Face Economic Pressures
European investors watch domestic politics closely while managing global uncertainty. France’s new government, led by Sébastien Lecornu, will address parliament at 15:00 CEST to present a budget aimed at reducing the nation’s deficit and restoring stability.
In the UK, unemployment rose to 4.8% in the three months to August, sparking new worries about the British economy’s resilience.
By midday, major European stock indexes fell. London’s FTSE 100 dropped 0.38% to 9,406.64, Paris’s CAC 40 declined 0.76% to 7,874.20, and Frankfurt’s DAX slipped 0.87% to 24,176.42.
The STOXX 600 benchmark fell 0.71%, and Madrid’s IBEX 35 lost 0.2% to 15,511.00.
In corporate news, EasyJet shares surged nearly 5% after takeover rumours involving shipping group MSC, despite MSC denying any deal.
“Investors are rethinking who could pursue EasyJet. That explains the price rise despite MSC’s denial,” said Dan Coatsworth, head of markets at AJ Bell.
Investors Turn to Safe Havens as Volatility Spreads
Across the Atlantic, US futures declined. Dow Jones futures dropped 0.8%, S&P 500 fell 0.94%, and Nasdaq slid 1.23%.
US rare earth companies gained strongly amid the trade dispute. Critical Metals jumped over 33% in premarket trading, USA Rare Earth rose 9%, and MP Materials climbed 6%.
The euro and the British pound weakened against the US dollar, while the Japanese yen strengthened slightly.
Oil prices tumbled as US benchmark crude fell more than 2% to $58.25, and Brent crude slipped below $62, down about 2%.
Gold and silver prices soared as investors sought safety. Gold reached $4,156.80, up 0.58%, and silver futures hit a record above $52 before retreating to $50.
Cryptocurrencies plunged sharply. 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 Earnings Season
Global sentiment remains tense amid fears of an AI-driven bubble. Tech valuations have surged much faster than company earnings.
Analysts warn that US markets appear overvalued, raising fears of another crash similar to the 2000 dot-com collapse.
Investors now await corporate earnings reports to gauge real growth. JPMorgan Chase, Johnson & Johnson, and United Airlines will release financial updates later this week, setting the tone for global markets.
