A look at the day ahead in European and global markets

By Wayne Cole, Chief Correspondent, Treasury

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It's TACO time, again. At least, investors are hoping the latest sound and fury from President Trump on tariffs will signify little in the end.

Steel rolls from China are seen after being unloaded at the Valparaiso port, Chile July 10, 2025. REUTERS/Rodrigo Garrido/File Photo

After all, he struck a different tone on social media over the weekend. "Don't worry about China, it will all be fine! Highly respected President Xi just had a bad moment. The U.S.A. wants to help China, not hurt it!!!"

Imagine a drinking game with a shot for every exclamation mark.

Trump is joining other world leaders in Egypt on Monday to discuss the Gaza ceasefire, so there will be plenty of opportunity for fresh headlines.

Beijing replied by defending its restrictions on rare earth minerals and refusing to take a call from the White House, which is all par for the course by now.

Trade data spoke to China's resilience as exports jumped 8.3% y/y in September, twice the forecast, while imports handily beat estimates. Exports of rare earths fell 31% from August, presumably as it tightened the screws on Western tech and defence manufacturers.

Investors seem to assume the November deadline will be extended again and it's safe to be back in the water, so S&P 500 futures rallied 1.3%, Nasdaq futures 1.8%. Expectations remain high for the Q3 earnings season that starts this week with the major banks. European stock futures are up between 0.2% and 0.5%.

Asia stocks are still suffering the fallout from Friday. Nikkei futures - the cash market is shut for a holiday - have bounced 1.6% to 46,835, but that's well short of Friday's 48,088 finish. South Korea is down 1.2% and Chinese blue chips 0.9%.

Currencies have steadied, with the safe-haven yen off and the risk-hedge Aussie bouncing. The euro is holding $1.1600 as markets wait to see if the new French cabinet can last longer than 14 hours, let alone get a budget through parliament.

The cash Treasury market is closed for a holiday, but 10-year futures are off 5 ticks or so. Gold made another peak around $4,059 and oil rebounded more than 1%.

Markets imply a 96% chance of a Federal Reserve rate cut later this month, and much the same for December. Fed Chair Powell has a chance to offer his guidance when he speaks on the economic outlook at the NABE annual meeting on Tuesday.

A host of other Fed members are appearing this week, along with a who's who of central bankers attending the IMF-World Bank meeting in Washington.

Graphics are produced by Reuters.

Graphics are produced by Reuters.

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