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Global stock markets fell after China banned certain U.S. shipping firms and Treasury Secretary Scott Bessent said “if they want to slow down the global economy, they will be hurt the most.” Asian and European indexes all dropped on the news, and S&P 500 futures were in sharp decline prior to the bell in New York. The index itself dropped nearly 1% immediately after the open.
A broad-based selloff swept global stock markets this morning after U.S. Treasury Secretary Scott Bessent told the Financial Times that China “will be hurt the most” if it doesn’t submit to Washington’s trade demands. At the same time, China showed no signs of backing down from President Trump’s trade war: It imposed sanctions banning Chinese companies from doing business with the U.S. subsidiaries of South Korean shipbuilder Hanwha Ocean. South Korea’s KOSPI fell 0.63% on the news.
S&P 500 futures were down 0.87% this morning. The index opened the better part of 1% lower almost immediately. Markets in Asia and Europe were almost all down, with Japan’s Nikkei 225 off 2.58% and Europe’s Stoxx 600 down 0.49% by midmorning.
Beijing’s new export controls on rare earth materials—which the U.S. is dependent on—are “a sign of how weak their economy is, and they want to pull everybody else down with them,” Bessent said. “Maybe there is some Leninist business model where hurting your customers is a good idea, but they are the largest supplier to the world,” he told the FT. “If they want to slow down the global economy, they will be hurt the most.”
“They are in the middle of a recession/depression, and they are trying to export their way out of it. The problem is they’re exacerbating their standing in the world.” (China is, in fact, doing very well. Its exports rose 8.3% in September and the World Bank expects China’s GDP to grow 4.8% this year. U.S. growth is forecast at 1.4%.)
The mood among traders today is a stark reversal from yesterday, when the S&P 500 rose 1.56% after investors realized that Trump and China President Xi Jinping will likely meet at the upcoming APEC conference at the end of October—an opportunity for both men to reach one of Trump’s famous deals.
Elsewhere, there wasn’t much to cheer up the markets. One third of bettors on Polymarket think the U.S. government shutdown will go on beyond November 8.
Pantheon Macroeconomics noted that consumer sentiment remains low: The University of Michigan’s consumer survey, which asks whether buyers feel now is a good time to make a major purchase, “now points to year-over-year growth in this measure of core spending slowing to near-zero soon, a far cry from the 6% pace earlier this year,” according to Samuel Tombs and Oliver Allen.
