Global markets swung sharply on Monday, as investors assessed efforts to temper a renewed outbreak of hostility in the simmering trade war between the United States and China.
Stocks in the United States and Europe bounced back from steep declines on Friday, after Mr. Trump posted on social media that he was considering a “massive increase in tariffs” on Chinese products and threatened cancel a planned meeting with China’s leader, Xi Jinping. But in recent days, Mr. Trump and his allies have struck a more diplomatic tone toward China.
Scott Bessent, the Treasury secretary, said in an interview on Fox Business on Monday that the two sides had “substantially de-escalated” and played down the possibility of steep new tariffs. Mr. Trump said on social media on Sunday that the United States did not want to “hurt” China, adding that “it will all be fine!”
Futures for the S&P 500 index futures rose more than 1 percent on Monday, regaining some ground lost in the previous trading session, which recorded the steepest decline in months. The tech-heavy Nasdaq index, which is driven by companies like the chipmaker Nvidia, which has been caught up in the fight for technological primacy between the United States and China, was on course for a gain closer to 2 percent.
Markets in Europe also traded mostly higher, with the Stoxx 600 index up about half a percent.
But stocks in Asia fell on Monday, with the Hang Seng in Hong Kong dropping roughly 1.5 percent. Benchmark indexes in South Korea and Taiwan fell about 1 percent, while the Shanghai Composite Index also declined slightly. Markets in Japan were closed for a holiday, but its Nikkei futures index had fallen around 5 percent on Friday before paring back some of those losses.
Mr. Trump’s latest threats, which included a 100 percent tariff on Chinese products starting on Nov. 1, came in response to China’s announcement that it would curb exports of some rare-earth minerals needed to make high-tech products including semiconductors, electric vehicles and jet fighters.
The recent bout of volatility was the most notable since April, when markets plunged after the United States and China announced that they would impose tariffs of more than 100 percent on each others’ goods. They agreed in May to temporarily slash the tariffs, and investors took that move as a sign that their trade conflict was easing.
The softening of Mr. Trump’s Friday tariff threat could be seen as another sign that market declines act as a “consistent brake on policymakers,” Henry Allen of Deutsche Bank wrote in a note on Monday. “There are large incentives to avoid selloffs, and we’ve seen numerous policy reversals under market pressure,” he added.
Even so, Beijing’s trade curbs and Mr. Trump’s tariff threats show how quickly calm can give way to confrontation between the world’s two largest economies.
The latest developments “raise the possibility that the two countries could once again enter into a trade war,” said Takahide Kiuchi, the executive economist at the Nomura Research Institute in Tokyo. “If this were to happen, the impact on the global economy would be severe,” he said.
The key question for investors is whether the threats of higher tariffs and export controls are serious or merely attempts to gain negotiating leverage ahead of bilateral talks between China and the United States set for later this month, the investment bank Goldman Sachs wrote in a note.
“We lean toward the latter interpretation and expect the ultimate resolution will be an extension of the current tariff pause,” it said.
As of last month, the trade tensions with the United States had not slowed Chinese shipments overseas, according to data released by the Chinese government on Monday. In September, overall exports grew 8.3 percent, compared with a year earlier. Shipments to the United States fell 27 percent, but China offset that downturn with strong exports to the European Union, Southeast Asia and Africa.
Relations between China and Europe took a hit after the Dutch government said late on Sunday that it was taking control of Nexperia, a Chinese-owned chipmaker based in the Netherlands, because of “serious governance shortcomings.” Wingtech, the chipmaker’s parent company, said in a filing that it strongly opposed the Dutch government’s action, which it described as driven by “geopolitical bias.” Wingtech’s shares fell 10 percent in Shanghai on Monday.
Investors getting to grips with geopolitics are also about to get more information about the state of the U.S. economy, as companies being to report their latest quarterly earnings. JPMorgan Chase, Goldman Sachs, Johnson & Johnson and other economic bellwethers are set to release earnings on Tuesday.
JPMorgan said on Monday that it would facilitate some $1.5 trillion in financing and investments over the next 10 years, focused on industries “critical to national economic security and resiliency” in the United States. “It has become painfully clear that the United States has allowed itself to become too reliant on unreliable sources of critical minerals, products and manufacturing,” Jamie Dimon, JPMorgan’s chief executive, said in a statement.
Daisuke Wakabayashi contributed reporting.
River Akira Davis covers Japan for The Times, including its economy and businesses, and is based in Tokyo.
Jason Karaian is the business news director, based in London. He was previously the editor of DealBook.
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