Tensions between China and the US keep escalating as both nations impose new shipping fees, unsettling investors. The confrontation marks a fresh chapter in their trade war, even as President Trump posted on social media, “Don’t worry about China, it will all be fine!”
European markets opened lower on Tuesday despite Wall Street’s gains on Monday, when Trump attempted to reassure investors about US-China ties. Investor confidence remains fragile as the two largest economies exchange economic blows.
Both sides introduced fees on each other’s ships on Tuesday after Washington’s probe into China’s growing power in shipbuilding. The US will charge $50 per tonne (€43.27) on Chinese vessels entering American ports. Beijing will respond with a 400-yuan (€48.65) per tonne levy, which will rise over time.
China also sanctioned five US-linked subsidiaries of South Korean shipbuilder Hanwha Ocean on Tuesday, asserting its maritime strength.
Trade talks between the two powers remain uncertain, but Trump said he still might meet Chinese leader Xi Jinping later this month during a regional summit.
Over the weekend, Trump threatened 100% tariffs before softening his tone online: “Don’t worry about China, it will all be fine! 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!!!”
European investors also show caution as France’s new prime minister, Sébastien Lecornu, prepares to address parliament at 15:00 CEST. Lecornu aims to restore political calm by passing a budget to cut France’s large deficit.
In the UK, rising unemployment—up to 4.8% in the three months to August—has fuelled fresh doubts about the country’s economic health.
Markets Fall as Investors React to Global Strain
By midday in Europe, stock indexes dropped across major exchanges. London’s FTSE 100 fell 0.38% to 9,406.64. Paris’s CAC 40 declined 0.76% to 7,874.20. Frankfurt’s DAX slipped 0.87% to 24,176.42.
The European benchmark STOXX 600 fell 0.71%, while Madrid’s IBEX 35 lost 0.2% to 15,511.00.
EasyJet shares surged after rumours of a takeover by shipping giant MSC. Despite MSC’s denial, EasyJet stock remained up nearly 5% at midday.
“Investors are reconsidering who might want to acquire EasyJet. That’s why shares remain high even after MSC’s denial,” said Dan Coatsworth, head of markets at AJ Bell.
Across the Atlantic, US futures fell. Dow Jones dropped 0.8%, S&P 500 lost 0.94%, and Nasdaq declined 1.23%. Rare earth companies, however, surged as trade tensions deepened. Critical Metals jumped over 33% in premarket trade, USA Rare Earth rose 9%, and MP Materials gained 6%.
The euro and British pound weakened against the dollar, while the Japanese yen strengthened slightly.
Oil prices plunged. US crude dropped more than 2% to $58.25, while Brent crude slid just below $62.
Gold and silver soared as investors sought safety. Gold reached $4,156.80, up 0.58%. Silver futures hit a record above $52 before retreating to around $50.
Cryptocurrencies tumbled. Before noon, Bitcoin fell 3.5% to $111,801, and Ethereum dropped 6.4% to $4,006.49.
Global Markets Brace for Corporate Results
Fears of an AI-driven market bubble weigh heavily on global sentiment as tech valuations soar. Analysts warn that US stocks now appear overpriced after prices outpaced profit growth.
Concerns over a repeat of the 2000 dot-com crash add pressure ahead of earnings season. Major firms like JPMorgan Chase, Johnson & Johnson, and United Airlines will release financial updates this week, setting the tone for markets worldwide.
