The trade war between China and the United States has reignited just as global stock markets were hoping for relief following the much-anticipated “Gaza peace deal” aimed at ending the conflict between Israel and Hamas. China’s decision to impose new restrictions on rare earth exports and President Donald Trump’s retaliatory move to slap an additional 100% tariff on Chinese goods triggered widespread turmoil across US, Asian, and European markets over the weekend.
The renewed deterioration in Washington–Beijing relations has raised fresh fears of a prolonged trade standoff that could severely destabilize global equities. Investor sentiment was rattled when China declared that it was “not afraid of a trade war,” heightening concerns of a new wave of economic confrontation. However, Beijing later appeared to soften its tone, clarifying that it had not banned rare earth exports but merely introduced a licensing requirement, an attempt to project flexibility without losing face.
"It is impossible to believe that China would have taken such an action, but they have, and the rest is History. Thank you for your attention to this matter!" – President Donald J. Trump pic.twitter.com/Kx6deI2voC
— The White House (@WhiteHouse) October 10, 2025
In a bid to calm market nerves, President Trump took to his social media platform, Truth Social, assuring followers that there’s no need to worry about China and that everything will be fine. His reassuring post helped cool tensions and fueled hopes that his much-awaited meeting with Chinese President Xi Jinping might still take place. In the US futures market, the Dow Jones Industrial Average surged 358 points (+0.8%), while S&P 500 futures climbed 1% and Nasdaq 100 futures gained 1.2%, reflecting cautious optimism. However, multiple headwinds continue to trouble global investors. Key concerns include: (1) the ongoing US government shutdown, (2) upcoming US and Indian retail inflation data, (3) closely watched speeches by US Federal Reserve Chairman Jerome Powell and his political rival, Trump ally Mirren, and (4) the corporate earnings season. These developments together are shaping a tense and unpredictable trading environment.
On the corporate front, several major Indian companies are in focus this week. HCL Tech, Anand Rathi Wealth, and Just Dial are set to announce their September quarter results today. Heavyweights such as Reliance Industries, Tech Mahindra, Axis Bank, Jio Financial Services, Wipro, HDFC Life, Nestle India, JSW Steel, ICICI Bank, and UltraTech Cement will follow later in the week. The series of earnings releases is expected to inject momentum into domestic trading activity, reflecting the resilience of India’s corporate sector amid global volatility. Across Asia and Europe, however, markets were hit hard. Japan’s Nikkei, China’s Shanghai Composite, Hong Kong’s Hang Seng, and Europe’s FTSE and DAX indices all dropped around 1.5% amid escalating trade tensions. In early trading, India’s GIFT Nifty slipped 50 points, suggesting a subdued start for both the Sensex and Nifty. Meanwhile, crude oil prices rebounded sharply after Trump’s reassuring comments. WTI crude rose 1.29% to $59.66 per barrel, while Brent crude gained 1.24% to $63.51. Although the rebound signals renewed confidence in global trade stability, it could place temporary pressure on the Indian rupee. The rupee, which had improved to ₹88.68 against the US dollar in the previous session from Rs 88.78, may face mild depreciation if oil prices continue to climb.
India emerges as a key beneficiary of renewed US trade engagement
India, however, finds itself in a relatively advantageous position amid the turbulence. Following a phone conversation between Prime Minister Narendra Modi and President Trump as part of the Gaza peace efforts, both leaders publicly praised each other’s diplomatic initiatives. Modi’s statement that India–US trade talks are “back on track” has boosted optimism that new economic cooperation is on the horizon. Analysts believe this could particularly benefit India’s export-oriented sectors such as textiles, IT, and pharmaceuticals. Reflecting this confidence, textile shares, ended the previous week with strong gains, and IT and pharma stocks are expected to perform well in the coming sessions.
Meanwhile, gold prices have resumed their upward march as investors seek safe havens amid the twin threats of the US shutdown and the revived trade war. International gold prices, which had briefly fallen below $4,000 an ounce last week, rose $64 to $4,050 today. Analysts expect domestic gold prices in India to touch new records, though confusion persists among jewellery associations over unified pricing. Discrepancies between different traders are creating uncertainty for both consumers and retailers.
Elsewhere, while signs of peace flicker in Gaza, the Russia–Ukraine conflict continues to escalate. President Trump has warned that the United States is ready to supply Ukraine with sophisticated “Tomahawk” missiles if Moscow refuses to engage in peace talks. Ukrainian President Volodymyr Zelensky, in a recent phone call with Trump, lamented that global attention has shifted away from Ukraine. His strong remarks to Russian President Vladimir Putin, that Kyiv would “respond decisively” if Tomahawks are delivered, have further heightened tensions in Eastern Europe. In the midst of global uncertainty, India stands out as a stable and rising economic power. With diplomatic agility, a robust corporate sector, and growing strategic leverage in global trade discussions, New Delhi appears poised to turn global volatility into an opportunity for resilience and renewed growth.
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