Market nervousness rose a notch on Friday with Donald Trump's outburst against China. Xi Jinping seems to be adopting the same tactic as Vladimir Putin towards the White House: feigning rapprochement and promising progress, before letting things drag on. The comparison is a bit bold, and ends there, because Sino-American economic interests are significantly greater than those between Russia and the US. The American President lost his temper after China imposed new restrictions on Western supplies of rare earths. He threatened to raise customs barriers to 130% on Chinese products imported into the United States and to cut off access to certain technologies, while leaving open the possibility of cancelling the meeting scheduled with Xi Jinping in two weeks' time. Then Donald Trump backtracked a little on Friday, and even more so on Sunday, which reawakened buying instincts this morning.

We'll talk about that a little later. But first, a quick overview of what's happening in the markets. Once again, on Friday we found ourselves with three somewhat caricatural camps:

  • First, the apocalyptic preachers. They see the worsening of Sino-American relations as the beginning of a huge global recession, or even a global collapse.
  • Next, the reasonable investors. They believe that the market has been overheated for several weeks and see the resumption of the standoff between the United States and China as a good excuse to take some profits.
  • Thirdly, there are the incorrigible optimists. They believe that, given the economic stakes between China and the United States, the two powers will eventually find a compromise and that the bluffing will continue, but with business continuing as usual.

On Friday, when the US response to China's restrictions on rare earth exports was announced, it was the reasonable investors who took control. They sold off technology and cyclical stocks left, right and centre, huddling together with defensive shares. On Friday, the Stoxx Europe 600 lost 1.25%, with a final slide that would not have been out of place in a Road Runner and Wile E. Coyote cartoon. But it was the Nasdaq 100, rich in technology stocks, that took the biggest hit, closing down 3.49%.

So we're left with a minor crisis to deal with, just as the first third-quarter corporate earnings reports are due to be released this week. LVMH, JPMorgan, Johnson & Johnson, ASML, Nestlé, American Express and EssilorLuxottica, no less. Twenty-five companies with a market capitalisation of over £100 billion, which will serve as an appetiser before the main course.

After Friday's shock sell-off, there is still a glimmer of hope this morning for the short term: Donald Trump and Xi Jinping have been trading statements over the weekend, suggesting a desire to mend fences. The American President, in his characteristic style, even wrote on Truth Social that, and I quote, 'the United States wants to help China, not hurt it'. The markets, which promptly sold off on Friday's news, are already buying into Sunday evening's news: Wall Street's leading indicators are flashing bright green for the opening in a few hours.

Let's move on to the news you need to know to get the week off to a good start:

  • China's exports grew at a faster pace than expected in September, particularly outside the United States. At first glance, this gives Beijing a slightly stronger hand than expected against Washington.
  • The war in the Gaza Strip is over, Donald Trump declared last night ahead of a visit to Israel, where the release of hostages held by Hamas is expected today.
  • In France, Prime Minister Sébastien Lecornu's new government is being presented as more technical and less political with the arrival of figures from civil society. Its expiry date is still uncertain.
  • On the commodities front, oil is falling under the dual influence of fears for global trade and détente in the Middle East. Gold is climbing due to trade tensions, taking silver with it, which is on the verge of breaking its 1980 record.
  • On the macro agenda: the partial shutdown of the US government due to the budget impasse in Congress continues to disrupt the publication of economic data in the United States. The Bureau of Labor Statistics has rescheduled the September Consumer Price Index (CPI). Instead of a release this week, it will be published on Friday, October 24, 2025. It said no other releases will be rescheduled or produced until the resumption of regular government services. This week, several central bankers will be taking to the podium, including Fed Chairman Jerome Powell on Tuesday.
  • On the corporate agenda: there are many announcements this week, as mentioned above. These include a slew of financials in the United States (JPMorgan, Wells Fargo, BlackRock, Citigroup, Goldman Sachs, Bank of America and Morgan Stanley) and iconic European companies (LVMH, ASML, Nestlé, etc.).

In Asia-Pacific, all indices are down this morning amid renewed trade tensions between the United States and China. Hong Kong is down 2.6%, while South Korea and Taiwan are down more than 1%. Australia is down 0.8% and India 0.3%. Japan is closed for a public holiday. A rebound is expected when Western markets open, but its sustainability will depend on the day's announcements, in a context where volatility has increased. The VIX index, which measures market tension, has crossed the 20-point mark for the first time since the beginning of August.

Today's economic highlights:

See the full calendar here.

  • GBP / USD: US$1.34
  • Gold: US$4,070.66
  • Crude Oil (BRENT): US$63.55
  • United States 10 years: 4.08%
  • BITCOIN: US$114,820

In corporate news:

  • Jefferies Financial Group has minimal exposure to the bankruptcy of First Brands Group.
  • AstraZeneca will offer direct sales to American patients with prescriptions for chronic diseases, with discounts of up to 80% off retail prices, in exchange for customs duty exemptions.
  • Shell partners with Moeve to provide sustainable aviation fuel via its blockchain-enabled platform, Avelia.
  • PSI Software SE to be acquired by Warburg Pincus for over 700 million euros following a public takeover offer.
  • Skanska AB secures a 1.7 billion SEK contract to construct a high-rise building and hotel in Nashville, Tennessee, USA.
  • Tessellis reports a net loss of EUR 26.2 million for the first half of 2025.
  • Anoto Group AB secured a convertible loan totaling $24 million to support its business plan.
  • SKAKO A/S has sold its remaining business operations and is undergoing a rebranding process.
  • Verisure board member Luis Gil purchased 4,420 shares of the company in the primary market.
  • Nexperia, the semiconductor arm of Wingtech Technology, faces Dutch government intervention due to national security concerns.
  • Caterpillar has acquired RPMGlobal for approximately $730 million.
  • Apple is preparing to acquire artificial vision start-up Prompt AI, according to CNBC.

See more news from UK listed companies here

Analyst Recommendations:

  • Flutter Entertainment Plc: Rothschild & Co Redburn maintains its buy recommendation and reduces the target price from USD 325 to USD 289.
  • Pan African Resources Plc: Nedbank CIB maintains its neutral recommendation and raises the target price from ZAR 22 to ZAR 28.
  • Phoenix Group Holdings Plc: Berenberg maintains its buy recommendation and raises the target price from GBX 850 to GBX 852.
  • Legal & General Plc: Berenberg maintains its buy recommendation and raises the target price from GBX 265 to GBX 289.
  • Kainos Group Plc: Peel Hunt initiates an add recommendation with a target price of GBX 1100.
  • Unite Group Plc: Panmure Liberum maintains its hold recommendation and reduces the target price from GBX 925 to GBX 675.
  • Fresnillo Plc: HSBC upgrades to hold from reduce with a price target raised from GBP 11 to GBP 20.
  • Easyjet Plc: Barclays maintains its overweight recommendation and reduces the target price from GBP 7 to GBP 6.75.
  • Unite Group Plc: Barclays maintains its overweight recommendation and reduces the target price from GBP 9.90 to GBP 7.25.
  • Ssp Group Plc: Citi maintains its buy recommendation and reduces the target price from GBP 3.30 to GBP 3.10.
  • Ashmore Group Plc: Morgan Stanley maintains its equalwt recommendation and raises the target price from GBX 160 to GBX 168.
  • Man Group Plc: Morgan Stanley maintains its equalwt recommendation and raises the target price from GBX 167 to GBX 202.
  • Schroders Plc: Morgan Stanley maintains its underweight recommendation and raises the target price from GBX 326 to GBX 340.
  • Lancashire Holdings Limited: Goldman Sachs maintains its buy recommendation and raises the target price from GBX 723 to GBX 736.