Market Report.
🇺🇸 The U.S. government shutdown continues with no end in sight, though markets seem complacent about the potential impact on economic growth. The statistics bureau is making a special effort to release the CPI data on Friday. The shutdown began on October 1, 2025, and has now become the third-longest in US history, entering its 20th day.
🚗 The bankruptcies of two auto industry-related companies, First Brands and Tricolor Holdings, have raised concerns about loose lending practices, especially in the opaque private credit market. The issues at these companies have left both the banking industry and investors concerned about whether instances of loans gone wrong indicate a burgeoning crisis.
🐜 JPMorgan CEO Jamie Dimon’s comment about seeing “one cockroach” and there being “probably more” has heightened these concerns. While the overall credit quality in the industry is still considered favorable, the recent developments show the low margin for error when there are hiccups in the credit market.
🇨🇳 China has accused the U.S. of creating “panic” over Beijing’s controls on rare earth exports, but indicated it is open to trade talks to resolve the dispute. The U.S. Trade Representative said Trump wants to work with Beijing, but the implementation of new 100% tariffs on China will depend on Beijing’s next moves.
🏭 The Trump administration is working to set up a domestic rare earth supply chain independent of China, including through deals with U.S. miners. Treasury Secretary Bessent said the administration could take equity stakes in more companies to combat China’s market manipulation and ensure U.S. self-sufficiency in critical industries. Bessent stated that when dealing with a “nonmarket economy like China,” the U.S. has to exercise “industrial policy” to level the playing field.
🔌 The copper market faces major supply challenges because demand is set to surge over the next decade due to the rapid expansion of artificial intelligence (AI) data centers, increased defense spending, and the global energy transition. Just like with rare earth minerals, copper supplies are limited—new mining projects take years to start, ore grades are declining, and much of the refining capacity is concentrated in a few countries, mainly China.
📉 China’s rare earth magnet exports fell 6.1% in September from August, ending three months of consecutive gains. However, exports were still 17.5% higher compared to the same month a year earlier. The monthly decline came as Chinese rare earth magnet firms have faced tighter scrutiny on export license applications since September.
🗓️ The Chinese government announced in early October that it would expand rare earth export controls, ahead of trade talks between President Xi Jinping and U.S. President Donald Trump. The top five export destinations for Chinese rare earth magnets in September were Germany, South Korea, Vietnam, the United States, and Mexico.
🚗⚙️ Rare earth magnet exports tumbled in April and May, causing supply shortages that forced global automakers to curtail production. Exports recovered over June to August after a series of trade deals were reached with the European Union and the United States.
📉 China’s economic growth slowed to the weakest pace in a year in the third quarter, raising concerns about deepening structural imbalances in the economy. The economy’s overreliance on exports at a time of mounting trade tensions with the U.S. is raising questions over whether Beijing has the resolve to tackle critical policy challenges.
📊 While the headline GDP growth of 4.8% in Q3 was in line with forecasts, it lagged the 5.2% pace in Q2, highlighting weak domestic demand. Sluggish domestic consumption, investment, and a worsening property market downturn remain concerns that need to be addressed.
🌍 However, China’s ability to diversify its exports away from the U.S. market has been a bright spot, with shipments to the EU, Southeast Asia, and Africa growing.
🤝 U.S. Treasury Secretary Scott Bessent said he expects to meet next week with Chinese Vice Premier He Lifeng in Malaysia to try to forestall an escalation of U.S. tariffs on Chinese goods. The two officials previously met in Europe over six months to hammer out a tariff truce, but that agreement is set to expire on November 10.
⚖️ President Trump has threatened an additional 100% tariff on Chinese imports starting November 1 unless Beijing scraps its new export restrictions on rare-earth minerals and magnets. Trump acknowledged the 100% tariff is “not sustainable” for the U.S. economy, but blamed China for forcing him to take that action.
🌐 The head of the World Trade Organization urged the U.S. and China to de-escalate their trade tensions, warning that a decoupling could reduce global economic output by 7%.
🤝 Despite the tensions, Trump confirmed he plans to meet with Chinese President Xi Jinping in two weeks in South Korea, expressing optimism that the two countries can reach a “fair deal”.
🧑💼 China has formalized the new role of top trade negotiator Li Chenggang, dropping him from the post of permanent representative to the World Trade Organization. As the former WTO envoy and assistant minister of commerce, Li Chenggang played a key role in the four rounds of U.S.-China trade talks.
🔥 However, Li’s recent visit to Washington in August ruffled feathers in the Trump administration, with U.S. Treasury Secretary Bessent describing him as “unhinged” and “very disrespectful.” Li’s unexpected appointment in April as the top trade negotiator came days after Beijing launched tariffs of 125% against Washington in its hardline stance early in the trade war.
🇯🇵 The president of Japan’s Liberal Democratic Party (LDP), Sanae Takaichi, who is anticipated to take over as prime minister in the next few days, is in favour of stimulus and opposed to additional interest rate increases, which would be bad for the currency and bonds but good for stocks.
🇬🇧 In UK, Asking prices for British homes barely rose in the four weeks to October 11, well below the usual seasonal increase, according to a survey by property website Rightmove. Speculation about potential tax increases in the upcoming budget by Finance Minister Rachel Reeves has led some buyers, particularly in southern England, to wait and see what policies are announced.
🏠 Other housing market indicators, such as the Halifax house price index, have also shown a slowdown in price growth, with the weakest annual increase since April 2024.
💬 Bank of England Governor Andrew Bailey said that Brexit is likely to continue to weigh on British economic growth over the coming years, offering a warning to the wider world about the damage caused by erecting trade barriers.
⚖️ However, let us remember that in the context of a trade war, as we have pointed out in previous reports, it has been able to play a positive role for the UK, placing it in a position more advantageous than the EU against the USA.
Geopolitics.
🔴 Israeli National Security Minister Itamar Ben-Gvir has repeatedly and publicly called for a return to war against Gaza after the release of hostages, using terms such as “open the gates of hell upon Gaza.” In statements given before and after recent hostage releases, Ben-Gvir has urged Prime Minister Netanyahu to resume full-scale fighting, declaring that Hamas must be completely destroyed.
Market View.
📈 US futures have recovered the losses that began on Friday. Mini S&P 500 futures have returned to the 6,730 level, while Nasdaq‑100 futures are trading above 25,120.
💵 The dollar has also bounced back from last week’s weakness, with the DXY index returning to around 98.50. This has pushed EUR/USD down from the 1.17 area on Friday to about 1.1660.
📉 In Europe, DAX 40 futures, which fell below 24,000 on Friday, appear to be recovering and are trading at 24,170. Eurostoxx 50 futures look firmer and stand at 5,665.
🛢️ Crude remains extremely weak, accentuated by rising trade tensions between China and the United States. Brent is trading below $61 a barrel, at $60.78.
🥇 Gold futures hit new highs on Friday at $4,390/oz before pulling back to the current $4,247/oz.
₿ Bitcoin fell to $103,530 on Friday but has rebounded strongly and is now trading above $111,300.
