European stock markets experienced a slight rebound on Monday following significant losses prior to the weekend, as US President Donald Trump rekindled tensions in the trade war with China. Trump announced plans to impose an additional 100% tariff on Chinese goods and threatened to cancel a summit with Chinese President Xi Jinping, citing China’s export restrictions on rare earth minerals used in various products, including smartphones and military hardware.
The US president’s comments led to a decline in Asian stock markets, with Hong Kong’s Hang Seng Index and Shanghai’s Composite Index closing down 1.5% and 0.2%, respectively. However, Trump’s subsequent statement on Sunday, in which he described Xi as “respected” and expressed a desire to help China, contributed to a slight increase in European equities. According to Joshua Mahony, chief market analyst at Scope Markets, the relief rally was a response to the violent market swings seen on Friday.
The ongoing trade tensions between the US and China have led to concerns about global economic instability, with the US government shutdown entering its third week. The Nasdaq index plummeted 3.6% on Friday, fueled by fears of a stock bubble and investor anxiety over the recent tech-led surge. Beijing has accused Washington of acting unfairly, with the Ministry of Commerce stating that threatening high tariffs is not an effective approach to engaging with China.
The trade dispute between the US and China has been ongoing for months, with both sides imposing tariffs on each other’s goods. The situation has significant implications for the global economy, and European countries are being cautioned not to let the US and China dominate technological innovation. Philippe Aghion, one of this year’s Nobel economics prize winners, warned that European countries must recognize the need to compete with the US and China in terms of technological leadership.
Key market figures as of 1045 GMT included a 0.1% increase in the London FTSE 100, a 0.4% increase in the Paris CAC 40, and a 0.4% increase in the Frankfurt DAX. The euro/dollar exchange rate decreased to $1.1587, while the pound/dollar exchange rate decreased to $1.3337. Brent North Sea Crude and West Texas Intermediate crude prices increased by 1.6% and 1.8%, respectively.
The ongoing trade tensions and market fluctuations are being closely monitored by investors and economists, who are awaiting further developments in the US-China trade dispute. The situation has significant implications for the global economy and will likely continue to influence market trends in the coming weeks.