Global markets retreat amid US-China trade tensions

US stocks declined on Friday, pulling back from record highs after President Donald Trump reignited trade tensions with China. Markets fell sharply following his threat of a “massive” tariff hike on Chinese goods and hints that he might cancel his upcoming meeting with President Xi Jinping. The S&P 500 dropped 2.70%, while the Dow Jones Industrial Average lost 879 points and the Nasdaq Composite sank 3.60%, erasing the week’s earlier gains. According to Trading Economics, Trump accused Beijing of using rare earths to assert dominance in global markets and criticised China’s new export restrictions, fuelling fears of a renewed trade conflict. Technology and semiconductor stocks led the downturn, while the ongoing US government shutdown added to the pressure by delaying key economic data releases and deepening investor uncertainty. 

Similarly, European stocks fell for a second straight session on Friday, with the STOXX 50 and STOXX 600 both losing around 1%. Defence shares led the declines as optimism grew over a US-brokered peace deal in the Middle East, with Israel confirming a ceasefire with Hamas, accompanied by troop withdrawals from parts of Gaza and the release of hostages. The broader European aerospace and defence sector dropped more than 2%, while mining stocks also weakened, dragging the basic resources index down over 1.50%. Market sentiment deteriorated further toward the close after Trump’s renewed tariff threat on Chinese goods, rekindling fears of a trade war. 

Meanwhile, Chinese stocks also fell sharply on Friday, giving back the previous session’s gains as weak global sentiment weighed on risk appetite. The Shanghai Composite lost 0.94% to close at 3 897 points, while the Shenzhen Component sank 2.70% to 13 355. The declines followed a steep sell-off on Wall Street, where concerns over stretched valuations — particularly in the AI sector — and uncertainty around the prolonged US government shutdown dampened investor confidence. A gauge tracking US-listed Chinese firms dropped 2% on Thursday, signalling that the recent rally in mainland equities may be losing momentum. Investors are now focused on the upcoming Communist Party leadership meeting from 20–23 October 2025 and a potential Xi-Trump encounter at the APEC summit later this month for fresh policy direction. In particular, new energy and technology shares led the retreat, dragging broader indices lower.

Turning to South Africa, stocks ended lower on Friday, with the FTSE/JSE All Share Index slipping 0.20% to 110 023 points and the Top 40 Index falling 0.41% to 102 650, as risk-off sentiment spread through global markets. The decline was led by weakness in large-cap and resource counters, reflecting softer commodity prices and renewed trade tensions abroad. Adding to the cautious tone, the rand weakened about 0.30% to R17.21 against the dollar, pressured by a stronger greenback and waning appetite for emerging market assets. Domestically, sentiment was tempered by fiscal caution, even as the National Treasury reaffirmed that South Africa remains on track to meet key debt and budget targets. Meanwhile, optimism around the European Union’s €11.5 billion investment pledge in South Africa’s clean energy and infrastructure sectors offered some longer-term support, helping to cap losses and highlight the country’s ongoing growth potential despite short-term market volatility.

Commodity markets were similarly under pressure, with energy and precious metals both feeling the strain. Oil fell sharply, with Brent crude sliding toward five-month lows after renewed US–China trade tensions threatened demand, while oversupply concerns and a decelerating global outlook added further downward pressure. Meanwhile, gold continued its ascent amid safe-haven flows, flirting with the $4 000 an ounce mark as investors sought protection amid geopolitical uncertainty and inflation concerns. Overall, the GSCI commodity index fell about 2.16%, reflecting broad weakness across the commodity complex.