Global Market Jitters Amid Xi-Trump Trade Truce, ECB Caution, and Rare-Earth Pause

Gerik

Summary:

Markets opened lower across Europe as investors weighed a mix of corporate earnings, muted ECB expectations, and cautious optimism following the Xi-Trump summit in South Korea...

Market Overview

European markets edged down in early trading on Thursday, reflecting a cautious sentiment ahead of key events: the European Central Bank's rate decision, third-quarter GDP figures, and a slew of earnings reports from major companies such as TotalEnergies, Volkswagen, and Anheuser-Busch InBev. The pan-European Stoxx 600 index dropped 0.1%, with the UK’s FTSE 100 falling 0.5% and France’s CAC 40 flat. Germany’s DAX was a rare gainer, up 0.3%, buoyed by strong earnings from industrial giants.

Shell’s Q3 profit slumped to $5.4 billion, but beat expectations and included a $3.5 billion share buyback plan. Airbus posted a 42% rise in operating profit, while ING Groep and Standard Chartered both reported stronger-than-expected profits, helping partially offset broader market weakness.

Geopolitical Sentiment: Xi-Trump Summit

Markets also responded to the much-anticipated summit between U.S. President Donald Trump and China’s President Xi Jinping in Busan, South Korea. In a sign of de-escalation, Trump agreed to cut tariffs on fentanyl-related Chinese imports from 20% to 10%, reversing his prior threat of 100% tariffs. This announcement triggered a wave of optimism in China, where hashtags such as “China-U.S. Leaders’ Busan Summit” trended heavily on platforms like Weibo and RedNote.

However, despite the positive tone, Chinese and Hong Kong equity markets declined following the summit, suggesting that traders remain skeptical of long-term resolution without specific structural trade concessions.

Rare-Earth Export Pause Offers Breathing Room

Adding to the geopolitical complexity, China announced a one-year suspension of its planned rare-earth export restrictions. Originally introduced on October 9, the controls would have expanded the number of regulated elements and tightened oversight of downstream products and technologies using Chinese rare earths.

This delay, reportedly aligned with the Xi-Trump trade truce, gives Western economies more time to strategize against China's dominance in the rare-earth market. However, analysts like David S. Abraham from Boise State University caution that the pause does little to shift the narrative around China’s resource leverage. The G7 is expected to announce a critical minerals alliance to counter Beijing’s grip by stockpiling supplies and fostering alternative supply chains.

U.S. Federal Reserve’s Dovish Stance Falls Short of Bulls’ Expectations

Investor sentiment was further tempered by the U.S. Federal Reserve’s cautious tone. While the Fed reduced its benchmark interest rate by 25 basis points to 3.75%-4%, Chair Jerome Powell emphasized that a December rate cut is “not a foregone conclusion,” dampening risk appetite.

U.S. futures retreated after hours, reacting to Powell’s remarks and earnings from Alphabet, Meta, and Microsoft. The Fed’s reluctance to signal a dovish pivot despite signs of slowing growth may continue to pressure equity markets globally.

While the Xi-Trump summit and rare-earth pause have momentarily stabilized geopolitical tensions, markets remain volatile as attention shifts to concrete policy actions. In Europe, earnings and economic data will dominate sentiment in the short term, while in Asia and the U.S., the durability of trade truces and central bank trajectories will shape investor behavior heading into year-end.

Until details of the U.S.-China trade agreement and G7 mineral strategies emerge, cautious optimism will likely define market movement, with macroeconomic and geopolitical crosswinds keeping volatility elevated.

Source: CNBC

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