Renewed Trade Tensions May Lead To Initial Pullback On Wall Street

(RTTNews) - The major U.S. index futures are currently pointing to a sharply lower open on Tuesday, with stocks likely to move back to the downside following the substantial rebound seen in the previous session.

Renewed concerns about trade tensions between the U.S. and China are likely to weigh on Wall Street after President Donald Trump's more conciliatory post about China helped trigger the rally on Monday.

Asked about the dispute over China's expansion of export controls on rare earths, a spokesperson for China's Ministry of Commerce suggested the country was only responding to Washington's restrictions on Chinese firms.

"The US has long overstated national security, abused export controls, and adopted discriminatory practices against China," the spokesperson said, according to Google translate.

They added, "In particular, since the Madrid trade talks between China and the U.S., the U.S. has continued to impose a series of new restrictive measures on China, which have seriously harmed China's interests and seriously undermined the atmosphere of the bilateral trade talks."

The spokesperson reiterated that China is willing to "fight to the end" if there is a trade war but said the "door is open" to trade talks.

Beijing has also announced sanctions against five U.S.-based subsidiaries of South Korean shipping giant Hanwha Ocean, accusing the firm of cooperating with Washington in its curbs on China's maritime sector.

After moving sharply higher early in the session, stocks continue to turn in a strong performance throughout the trading day on Monday. The major averages all showed strong moves to the upside, partly offsetting the steep losses posted last Friday.

The major averages moved roughly sideways after the early surge, hovering near their best levels of the day. The Nasdaq spiked 490.18 points or 2.2 percent to 22,694.61, the S&P 500 shot up 102.21 points or 1.6 percent to 6,654.72 and the Dow jumped 587.98 points or 1.3 percent to 46,067.58.

The substantial rebound on Wall Street came as traders looked to pick up stocks at somewhat reduced levels following the steep drop seen over the course of the previous session.

The major averages plunged to their lowest closing levels in a month on Friday amid concerns about a U.S.-China trade war, with President Donald Trump threatening a "massive increase" in tariffs on Chinese imports in retaliation for its expansion of export controls on rare earths.

Trump stuck a more conciliatory tone in a post on social media platform Truth Social on Sunday, helping to ease the trade war worries.

"Don't worry about China, it will all be fine!" Trump said. "Highly respected President Xi just had a bad moment. He doesn't want Depression for his country, and neither do I. The U.S.A. wants to help China, not hurt it!"

The rally came amid a lack of major U.S. economic data, with the economic calendar likely to remain quiet throughout much of the week due to the ongoing government shutdown.

The Bureau of Labor Statistics has revealed the report on consumer price inflation that had been due to be released on Wednesday will now be released on Friday, October 24th.

While no other releases will be produced until the resumption of regular government services, the BLS noted the consumer price index data allows the Social Security Administration to meet statutory deadlines necessary to ensure the accurate and timely payment of benefits.

Semiconductor and computer hardware stocks turned in some of the market's best performances after leading Friday's sell-off, with the Philadelphia Semiconductor Index and the NYSE Arca Computer Hardware Index both soaring by 4.9 percent.

Gold stocks also saw substantial strength as the price of the precious metal skyrocketed to a new record high, resulting in a 4.7 percent spike by the NYSE Arca Gold Bugs Index.

Steel, oil service, networking and airline stocks also showed significant moves to the upside amid broad based buying interest on Wall Street.

Commodity, Currency Markets

Crude oil futures are tumbling $1.42 to $58.07 a barrel after climbing $0.59 to $59.49 a barrel on Monday. Meanwhile, after soaring $132.60 to $4,133 an ounce in the previous session, gold futures are edging down $3.60 to $4,129.40 an ounce.

On the currency front, the U.S. dollar is trading at 151.98 yen compared to the 152.27 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is trading at $1.1553 compared to yesterday's $1.1568.

Asia

Asian stocks closed mostly lower on Tuesday as Sino-U.S. trade tensions simmered and the U.S. government shutdown entered its 13th day, with Republican House Speaker Mike Johnson predicting that the federal government shutdown may become the longest in history.

Markets also braced for earnings from Wall Street's biggest banks and Federal Reserve Chair Jerome Powell's keynote speech on the U.S. economic outlook and monetary policy.

Chinese and Hong Kong markets fell as the United States and China launched a new round of retaliatory measures by imposing mutual port fees on each other's shipping firms, escalating trading tensions and impacting global maritime industry.

After U.S. President Donald Trump expressed shock at China's "surprising" move to unleash sweeping export controls on rare earths and accused the country of "becoming very hostile," Beijing said it was Washington's expansion of curbs on Chinese firms that ratcheted up tensions.

China's Shanghai Composite Index slid 0.6 percent to 3,865.23, while Hong Kong's Hang Seng Index tumbled 1.7 percent to 25,441.35.

Japanese markets led regional losses after the coalition government collapsed, threatening Sanae Takaichi's ascent to prime minister.

The Nikkei 225 Index plunged 2.6 percent to 46,847.32 as the fluid political situation complicated the outlook for fiscal policy. The broader Topix Index settled 2 percent lower at 3,133.99. Among the prominent decliners, SoftBank Group, Chugai Pharma and Furukawa Electric lost 6-7 percent.

Seoul stocks gave up early gains to end lower as U.S.-China trade tensions escalated. The Kospi fell 0.6 percent to 3,561.81. Samsung Electronics slumped 1.8 percent despite reporting much stronger-than-expected third quarter earnings on strong chip demand.

Hanwha Ocean shares plummeted 5.8 percent after Beijing announced sanctions against five U.S.-based subsidiaries of the South Korean shipping giant, accusing the firm of cooperating with Washington in its curbs on China's maritime sector.

Australian markets ended slightly higher as rate earth stocks extended gains on renewed U.S.-China tensions. A surge in gold prices to another peak sent gold miners higher, offsetting losses in the banking sector.

Minutes from Reserve Bank of Australia's September meeting released earlier in the day prompted traders to pare their bets of a November 4 rate cut.

The benchmark S&P/ASX 200 Index edged up by 0.2 percent to 8,899.40, while the broader All Ordinaries Index closed up 0.3 percent at 9,208.50.

Across the Tasman, New Zealand's benchmark S&P/NZX-50 Index fell 0.6 percent to 13,276.99.

Europe

European stocks have moved to the downside on Tuesday as trade tensions between the U.S. and China escalated and traders monitored ongoing political upheaval in France.

China's commerce ministry said it remained open to talks, but the U.S. cannot seek dialogue while threatening new measures.

"If you wish to fight, we shall fight to the end; if you wish to negotiate, our door remains open," China's commerce ministry said in an official statement.

In addition, Beijing reportedly said it was Washington's expansion of curbs on Chinese firms in late September that ratcheted up tensions and drove it to further tighten its grip on critical rare earths.

Investors also digested a slew of weak regional data and braced for an address by Federal Reserve Chair Jerome Powell as well as earnings from Wall Street's biggest banks.

German consumer price inflation rose for the second consecutive month in September, as initially estimated, final data from Destatis revealed earlier today.

The consumer price index rose 2.4 percent year-on-year following a 2.2 percent increase in August. The statistical office confirmed the estimate published on September 30.

Inflation, based on the EU measure of harmonized index of consumer prices or HICP, accelerated sharply to 2.4 percent, as estimated, from 2.1 percent in August.

The German ZEW economic sentiment index came in at 39.3, below expectations for a reading of 40.5 in October.

Elsewhere, the U.K. unemployment rate rose slightly in the three months to August, the Office for National Statistics reported. The ILO jobless rate rose slightly to 4.8 percent from 4.7 percent in the preceding period.

The number of vacancies decreased 9,000 to 717,000 in the three months to September. Payrolled employees decreased 31,000 sequentially in the June to August period, data showed.

The German DAX Index is down by 1.3 percent, the French CAC 40 Index is down by 1.0 percent and the U.K.'s FTSE 100 Index is down by 0.4 percent.

Germany's Deutsche Telekom gained 1 percent after announcing a major collaboration with Comcast Technology Solutions.

Dutch digital mapping specialist TomTom surged 8.3 percent after Q3 profit topped expectations.

THG rallied 3.6 percent in London as the online beauty and nutrition group delivered its strongest organic quarterly sales increase in four years.

Bytes Technology Group shares plunged 10 percent. The software and services specialist reported a decline in interim profit after Microsoft's reduction of certain Enterprise Agreement incentives took effect in January 2025.

GSK rose 1 percent after its Shingrix vaccine received approval in China.

Homebuilder Bellway climbed 5 percent after it announced a £150 million share buyback program.

Oil & gas major BP declined 1.3 percent after saying weak oil trading performance hit the company's quarterly profit.

French advertising giant Publicis Groupe rose about 1 percent after beating Q3 expectations and raising its full-year guidance.

Swedish telecoms equipment maker Ericsson soared 14 percent after reporting a better-than-expected rise in quarterly earnings.

Swiss fragrance and flavor maker Givaudan added 1.2 percent after quarterly sales matched market expectations.

U.S. Economic News

Federal Reserve Chair Jerome Powell is scheduled to speak on the economic outlook and monetary policy before the National Association for Business Economics Annual Meeting at 12:20 pm ET.

At 3:25 pm ET, Federal Reserve Governor Christopher Waller is due to participate in a "Payments" discussion before the 2025 Institute of International Finance Annual Membership Meeting.

Boston Federal Reserve President Susan Collins is scheduled to speak and participate in a moderated question-and-answer session before the Greater Boston Chamber of Commerce at 3:30 pm ET.