Global equity markets kicked off the week on a strong footing after signs emerged that Washington and Beijing have agreed to pause their trade confrontation. The tariff increases on Chinese imports that were expected to land on the 9th of November now appear to be on hold. This caused major US indices (including the Nasdaq, S&P 500 and Dow Jones) to respond by touching new record levels at Monday’s open. U.S. Treasury Secretary, Scott Bessent, suggested that the two sides had struck an initial agreement covering both export controls and a 90-day extension of the current truce. Reports also indicate that China has bought at least two cargoes of US soybeans (its first known purchase this season) which could signify a revival of flows between the two economies.
That said, any meaningful easing in trade frictions is unlikely to translate quickly through the global economy. Supply chains have already absorbed a year’s worth of disruptions from tit-for-tat levies, and energy markets have been among the first to react to each change in tone. Illustrating ongoing sensitivity, oil prices retreated by 2% on Tuesday following signals that OPEC plans to raise production.
Elsewhere that same day, President Trump met Japan’s newly appointed Prime Minister, Sanae Takaichi. The two leaders are understood to have signed an accord centred on rare earth materials – essential inputs for advanced manufacturing and modern consumer technology. A statement from the White House suggested that both countries are exploring joint stockpiles and coordination with allies to reinforce supply chain resilience.
In the UK, fresh data from the British Retail Consortium showed that shop prices eased by 0.3% in October compared with the previous month. Consumers will welcome the softer backdrop, even though fresh food costs continue to edge higher. Annual food inflation slowed to 3.7% from 4.2% in September – a moderation the Bank of England will be paying close attention to, given its relevance not only for headline inflation, but for household expectations of future price pressures.
Markets are now turning their attention to Thursday’s planned meeting between President Trump and China’s President Xi Jinping. In advance of the talks, China’s Commerce Minister, Wang, publicly rejected the idea that Beijing is preparing to sever economic ties with the United States. Eyes are also on the Fed’s meeting on today, where markets are pricing in a cut of 25 basis points. We also have the Bank of Japan’s interest rate decision, Eurozone GDP and their interest rate decision and some big tech earnings are due out today.
Nicola Tune, Portfolio Specialist
