Stock futures rebounded sharply on Monday after Friday’s selloff, driven by conciliatory remarks from President Trump and Vice President JD Vance that eased fears of an escalating US-China trade war. Equities had fallen on Friday due to Trump’s threats of a 100% tariff increase and new export controls on China following Beijing’s rare-earth export restrictions, raising concerns about a renewed trade conflict and supply chain disruptions. However, Trump’s recent assurances of wanting to help China, along with Vance’s emphasis on negotiation leverage, restored investor confidence. The rally lifted major futures indexes by over 1%, with Nasdaq-100 futures rising nearly 2%, while the dollar strengthened amid a US Treasury market holiday. Meanwhile, the government shutdown continues, affecting federal workers’ pay, though military personnel payments are assured.
European equities saw a strategic pullback as the STOXX Europe 600 dipped 1.10%, driven by profit-taking, French political instability, and escalating trade tensions. Key markets followed suit: Germany’s DAX fell 0.56%, France’s CAC 40 dropped 2.02%, Italy’s FTSE MIB slid 2.80%, and the UK’s FTSE 100 eased 0.67%. German industrial output plunged 4.3% in August, led by autos, signaling recession risk; exports fell 0.5%. Berlin launched fiscal reforms and EV incentives to stabilize growth. The UK housing market cooled, with prices down 0.3% and demand softening. France’s government crisis deepened after Prime Minister Lecornu’s resignation amid mounting political fragmentation (although reappointed by Macron on Friday).
