By Amanda Cooper
LONDON (Reuters) -Global shares tumbled, and safe havens such as bonds and gold rallied on Tuesday, as investors grew uneasy over tensions between the United States and China before talks between the two countries aimed at striking a durable trade deal.
Markets had earlier joined the rebound from Monday’s cash session after U.S. Treasury Secretary Scott Bessent said President Donald Trump remains on track to meet Chinese leader Xi Jinping in South Korea for a two-day summit starting on October 31. But he added fuel to the fire in an interview in the Financial Times where he accused Beijing of trying to damage the global economy.
As negotiations between Washington and Beijing intensify, the two nations from Tuesday were charging port fees on ocean shipping firms that move goods ranging from toys to crude oil.
‘ESCALATE TO DE-ESCALATE’
“Both Washington and Beijing are posturing before the November summit – escalate to de-escalate,” said Marc Velan, head of investments at Lucerne Asset Management in Singapore. “Neither can afford a trade war heading into U.S. midterms.”
Stocks in Europe, which have hit record highs this month, were down 0.7%, echoing weakness in Asian markets, where technology stocks got hit hard.
Futures on the S&P 500 and the Nasdaq fell between 0.9% and 1%, suggesting there may not be a repeat of Monday’s rally, but a full reversal also looked unlikely.
“If one looks at the recent history of export controls and charges for ships docking in ports, then it’s been largely interpreted as a path towards negotiation rather than a fresh outbreak of hostilities on the trade front between the U.S. and China,” Investec chief economist Philip Shaw said.
“So yes, there is uncertainty, but you’ve had a huge rally, not just in U.S. stocks, but a lot of global indices as well. And while there are still some question marks over U.S.-China trade friction, I’d interpret the latest sell-off as a bit of a correction rather than a huge stepping-up of investor uncertainty,” he said.
Wall Street’s main indexes had ended as much as 2.2% higher on Monday, led by chipmakers, after Trump struck a more conciliatory tone on trade tensions with China, reversing some of the panic from Friday when Trump announced 100% tariffs on China.
MARKET RISK BAROMETERS FLASH RED
Reflecting the increased investor angst, gold rose 0.5% to $4,130 an ounce, just shy of Tuesday’s new record of $4,179.48. In contrast, bitcoin, which tends to move in line with other risk assets, fell 3.6% to $111,793, bringing losses over the last week to nearly 12.5%.
