Market Report
🇨🇳 The readout from the “Fourth Plenum” meeting in China decides to boost domestic consumption over the next five years, in addition to plans to strengthen national technology.
💡 However, the tone suggests China will focus more on investment in consumption-related sectors like urban planning, public services, and elderly care, rather than direct cash handouts to consumers. The readout emphasized achieving the 2025 growth target of around 5% and other previously shared goals for 2027 and 2035, implying annual growth of 4.6% through 2035, which will be “very costly” to achieve.
🚀 China also called for a “significant leap forward” in economic, technological, and defense strength by 2035, signaling a continued focus on technological self-reliance amid U.S. restrictions.
🤝 President Trump is aiming for a quick win in his upcoming meeting with Chinese President Xi Jinping, even if the outcome falls short of a sweeping trade deal. Trump wants to extend a pause on higher tariffs in exchange for China resuming U.S. soybean purchases, cracking down on fentanyl, and backing off rare-earth export restrictions.
⚠️ However, any agreement would simply dial down tensions, rather than address core conflicts between the U.S. and China. A grand bargain is unlikely given the national security and domestic political risks. Trump’s negotiating style focuses on short-term wins, while Xi takes a long-term approach leveraging China’s manufacturing and natural resource advantages.
🌐 China is unlikely to back down on rare-earth export restrictions without major U.S. concessions, which are politically untenable in Washington. There are concerns Trump’s desire for a “win” could lead to unthinkable concessions, such as departing from the U.S. policy of strategic ambiguity on Taiwan. For years, previous administrations have used Taiwan as a confrontational axis against China, just as Ukraine has been used as a confrontational axis against Russia.
🕒 Last night, the White House announced that President Trump will meet with China’s President Xi on October 30th, just 48 hours before the planned 100% tariff increase on China is set to take effect. The timing of the meeting suggests a potential last-minute effort to ease trade tensions and negotiate a resolution.
🇪🇺 Meanwhile, in Europe, French President Emmanuel Macron has urged European Union leaders to consider using the EU’s most powerful trade tool against China if they are unable to resolve Beijing’s planned export controls on critical raw materials. He said all options should be considered, including the EU’s anti-coercion instrument – a trade defense tool that allows the bloc to retaliate against economic coercion by third countries.
📉 Macron’s comments reflect growing European concerns over China’s potential restrictions on the export of critical raw materials, which are essential for the production of various high-tech products. The French presidency did not immediately respond to a request for comment, indicating the sensitivity of this issue within the EU.
⚔️ As we have pointed out in previous reports, the possibilities for the US to use Europe as an instrument of pressure against China, in the same way that it does against Russia, are very high.
💷 The United States and the United Kingdom have actively pushed European nations—particularly EU leaders—to use frozen Russian assets to assist Ukraine financially and militarily.
📅 The European Union has postponed a decision on whether to tap into frozen Russian central bank assets to aid Ukraine, held mainly at Euroclear in Belgium, until their next summit in December, following coordinated pressure from the UK and US governments. This comes after Belgium demanded greater assurances that it would not be held liable for any risks associated with the €140 billion ($163 billion) in loans. The delay in decision-making reflects the complexities and potential legal risks involved in repurposing the frozen Russian funds, which are a significant sum.
🛠️ The European Commission, backed by UK and US lobbying, is developing a framework for risk-sharing and legal assurances for Belgium and other member nations.
🇯🇵 It seems that Japan will also be another axis of pressure, between the US and China. The new hardline coalition partner of Japanese leader Sanae Takaichi, the Japan Innovation Party (Ishin), has unshackled her security ambitions and given U.S. President Donald Trump room to press for increased military spending from Japan.
🛡️ Takaichi’s move to partner with the right-wing Ishin party frees her to push Abe-era security reforms further, such as revising Japan’s pacifist constitution and strengthening the military to deter China. This shift away from the more pacifist-leaning Komeito party gives Trump an opportunity to press Takaichi for higher defense spending, potentially up to 3-5% of GDP.
🎁 To win Trump’s favor, Takaichi plans to present a package of U.S. purchases, including vehicles, agricultural goods, and potential investments, rather than committing to specific defense spending targets. China has expressed concern about Japan’s commitment to peace and self-defense under Takaichi’s leadership.
❌ President Trump has announced that all trade negotiations with Canada have been terminated, citing what he called a “fraudulent advertisement” featuring former President Ronald Reagan criticizing tariffs. The ad in question was created by the government of Ontario and featured audio and video of Reagan speaking against tariffs on foreign goods, which Trump found objectionable.
🇨🇦 The ad in question was created by the government of Ontario and featured audio and video of Reagan speaking against tariffs on foreign goods, which Trump found objectionable. The Ronald Reagan Presidential Foundation has stated that the ad “misrepresents” Reagan’s remarks and that they are reviewing their legal options.
🔥 This move by Trump signals a further escalation of trade tensions between the U.S. and Canada, potentially jeopardizing the review of their 2020 continental free-trade agreement scheduled for next year.
📞 After a “very productive” phone call between President Trump and Russian President Putin, where they agreed to meet in Hungary, Trump abruptly changed course and criticized Putin, canceled the meeting, and imposed new sanctions on major Russian oil companies.
🇷🇺 Kremlin spokesman Dmitry Peskov has not yet publicly commented on the canceled meeting, the new sanctions, or the prospect of future Trump-Putin talks. Russia’s Foreign Ministry spokesperson criticized the sanctions as counterproductive to finding a peaceful solution in Ukraine, while former Russian President Medvedev slammed Trump for “fully aligning” with an “insane Europe.”
🛢️ The new U.S. sanctions on Russian oil majors Lukoil and Rosneft are aimed at pressuring Moscow to agree to a ceasefire in Ukraine by depriving it of oil revenue to fund the war. The EU also launched a fresh round of sanctions against Russia, including a ban on Russian liquefied natural gas imports, which the EU’s foreign policy chief described as a “good signal of strength.”
💬 Nigel Farage, the leader of the Reform UK party, has suggested that he might replace Bank of England Governor Andrew Bailey if his party wins the next election. During an interview, Farage described Bailey as “a nice enough bloke” but said he’s “had a good run” and that they “might find someone new” to lead the central bank.
🏛️ Farage’s comments raise concerns about potential political interference in the Bank of England’s independence, drawing comparisons to former U.S. President Donald Trump’s confrontational stance with the Federal Reserve. In previous meetings where Farage advocated for ending the Bank’s quantitative tightening program, claiming it unnecessarily burdens taxpayers.
📊 Market View.
📈 Wall Street regains its optimism as Mini S&P 500 futures head towards all-time highs, currently trading at 6,795 points. Nasdaq 100 futures are in a similar position, with the Nasdaq nearing record highs at 25,360 points.
💵 The DXY dollar index remains steady around the 99-point zone, but the EUR/USD pair has managed to recover to 1.16, currently trading at 1.1615.
📉 In Europe, futures are also turning positive. DAX 40 futures continue their recovery and are approaching 24,400 points. EuroStoxx 50 futures are once again nearing record highs, currently trading above 5,700 points.
🛢️ Crude oil is retreating after an incredible bullish rally, with Brent crude settling in the $65.50 per barrel zone after briefly surpassing $66 in the last few hours.
🥇 Gold futures have eased slightly but remain above $4,000 per ounce, currently trading at $4,110 per ounce.
💎 Bitcoin is also regaining momentum, currently trading above $111,500.
