China and the US continue to strain relations by placing new fees on each other’s ships, alarming investors. President Trump tried to calm markets with his social media post: “Don’t worry about China, it will all be fine!”
European markets opened lower on Tuesday despite Monday’s Wall Street rally, sparked by Trump’s reassurance about ties with Beijing. Investor confidence remains fragile as the two largest economies escalate trade hostilities.
Both nations began imposing shipping fees on Tuesday after Washington investigated China’s dominance in global shipbuilding. The US now charges $50 (€43.27) per tonne on Chinese vessels in American ports, while Beijing set a 400 yuan (€48.65) fee per tonne that will rise gradually.
Beijing also sanctioned five US-linked subsidiaries of South Korean shipbuilder Hanwha Ocean to reinforce its maritime power.
Trade negotiations remain uncertain, but Trump said he may still meet President Xi Jinping later this month during a regional summit.
Over the weekend, Trump threatened China with 100% tariffs before declaring online: “Don’t worry about China, it will all be fine! President Xi just had a bad moment. He doesn’t want Depression, and neither do I. The USA wants to help China!”
European investors also show caution as France’s new government, led by Sébastien Lecornu, prepares to address parliament at 15:00 CEST. Lecornu plans to stabilize France politically by passing a budget that reduces the national deficit.
In the UK, rising unemployment, reaching 4.8% in the three months to August, deepens worries about economic weakness.
European and US Markets Slide Amid Uncertainty
Before midday in Europe, the FTSE 100 dropped 0.38% to 9,406.64, the CAC 40 fell 0.76% to 7,874.20, and the DAX declined 0.87% to 24,176.42. The STOXX 600 slipped 0.71%, while Madrid’s IBEX 35 dipped 0.2% to 15,511.00.
EasyJet shares rose nearly 5% by midday after speculation about a possible takeover by shipping giant MSC. Despite MSC denying the claim, the rumour kept shares high.
“Investors are now rethinking potential buyers for EasyJet. That explains the sustained rise despite MSC’s denial,” said Dan Coatsworth, head of markets at AJ Bell.
Across the Atlantic, Dow Jones futures dropped 0.8%, S&P 500 futures fell 0.94%, and Nasdaq futures declined 1.23%. US rare earth companies gained sharply as the trade conflict with China escalated. Critical Metals soared over 33%, USA Rare Earth rose 9%, and MP Materials climbed 6% by early afternoon in Europe.
The euro and British pound weakened against the dollar, while the Japanese yen strengthened.
Oil prices plunged, with US crude falling over 2% to $58.25 and Brent slipping below $62, down about 2%.
Gold and silver prices surged as investors sought safety. Gold hit $4,156.80, up 0.58%, while silver futures reached above $52 before retreating to around $50.
Cryptocurrencies fell sharply. Before noon in Europe, Bitcoin dropped 3.5% to $111,801, and Ethereum sank 6.4% to $4,006.49.
Global Investors Brace for Earnings Season and Tech Valuation Fears
Global market sentiment weakens amid fears that an AI-driven tech bubble may burst after months of rapid gains. Critics argue that US market valuations have far outpaced profit growth, creating conditions similar to the 2000 dot-com crash.
Rising anxiety now surrounds the upcoming earnings season, which could determine whether markets can sustain their momentum. Major US firms — including JPMorgan Chase, Johnson & Johnson, and United Airlines — will release their financial results this week, setting the tone for global investors.
