LOGIN
The Morning Edge

Safe-Haven Rally Deepens as US–China Trade War Escalates Over Rare Earths

Here’s your quick read to start the day: a chatty, no-fuss look at overnight moves, the big story, what’s on the docket, and the tickers you need to watch.

Article related image
iStock.com/Rawf8

By Richard Fargose

October 16, 2025 at 1:39 AM IST

GLOBAL MOOD: Cautiously Risk-off
Drivers: US–China trade tension, Gold Surge, US Government Shutdown

Markets stayed cautiously risk-off as renewed US–China trade tensions over rare earth controls spurred safe-haven demand. Goldsurged past $4,200, oil extended losses, and a softer dollar reflected lingering Fed rate-cut expectations and geopolitical unease.

TODAY’S WATCHLIST
 - ECB President Lagarde Speech               
 - Infosys, Wipro, Nestle India earnings


THE BIG STORY
Top US officials on Wednesday sharply criticised China’s expanded export controls on rare earth elements, warning that the move poses a serious threat to global supply chains. US Trade Representative Jamieson Greer labelled Beijing’s actions a “global supply-chain power grab,” while Treasury Secretary Scott Bessent emphasised that Washington does not seek further escalation, despite heightened tensions. Greer noted that China’s new regulatory framework has not yet been implemented and urged Beijing to reconsider before triggering retaliatory US tariffs, which remain under review. Both officials reaffirmed that President Donald Trump still plans to meet President Xi Jinping in South Korea later this month to discuss trade and economic cooperation.

Meanwhile, gold prices surged past $4,200 per ounce for the first time, with December futures closing at $4,201.60, as investors turned to safe-haven assets amid intensifying US-China trade frictions and rising expectations of Federal Reserve rate cuts.

Data Spotlight 
US retail sales excluding autos and parts rose 0.5% in September, following a 0.7% gain in August, according to the Chicago Fed Advance Retail Trade Summary. However, when adjusted for inflation, sales increased only 0.2%, suggesting that part of the nominal rise was driven by higher prices linked to import tariffs. Meanwhile, the Federal Reserve’s Beige Book reported that overall US economic activity was little changed, though there were signs of rising layoffs and reduced spending among middle- and lower-income households. Businesses in several districts cited weaker demand and increased uncertainty, with some attributing job reductions to investment in AI technologies.

Takeaway: Retail spending remains resilient but increasingly price-driven, while the broader economy shows early signs of fatigue, reinforcing expectations for further Fed rate cuts in coming months.

WHAT HAPPENED OVERNIGHT

  • US Stocks edge higher on bank earnings, but trade tensions cap gains
    • US equities ended mostly higher as strong bank earnings offset renewed US–China trade tensions and the prolonged government shutdown.
    • S&P 500 rose 0.4%, led by robust results from Morgan Stanley and Bank of America.
    • Nasdaq gained 0.7%, boosted by a 3% rally in semiconductor stocks following upbeat results from ASML.
    • Dow Jones closed slightly lower as late-session geopolitical jitters curbed risk appetite.

 

  • US Treasury yields edge higher as trade tensions ease slightly
    • Yields moved modestly higher as investors digested fresh US–China developments.
    • Treasury Secretary Scott Bessent’s proposal to pause tariff hikes in exchange for China delaying export restrictions offered a brief boost to sentiment.

 

  • US Dollar slips as trade uncertainty and Fed dovishness weigh on sentiment
    • Dollar index fell 0.36% to 98.71, pressured by dovish Fed signals and ongoing trade tensions.
    • Safe-haven currencies like the yen and Swiss franc strengthened.
    • Persistent uncertainty from the US government shutdown and rate-cut bets kept the dollar under pressure.

  • Crude oil prices fall to 5-month low on trade tensions
    • Brent crude fell 0.8% to $61.91/bbl, and WTI dropped 0.7% to $58.27/bbl.
    • Renewed US–China trade frictions and a bearish IEA outlook weighed on sentiment.



Day’s Ledger

Economic Data

  • IMF/World Bank Annual Meetings                     
  • Aus Sep Employment Change
  • Germany Aug Balance of Trade
  • Euro Aug Balance of Trade 
  • India M3 Money Supply
  • US Sep PPI
  • US Jobless Claims

 Corporate Actions

  • Jul-Sep Earnings: Infosys, Eternal, Wipro, Nestle India, Jio Financial Services, LTIMindtree, Indian Bank, Waaree Energies
  • India Glycols to consider raising funds
  • Inter Globe to consider warrant conversion 
  • Valiant Communication to consider raising fund

Policy Events

  • ECB President Lagarde Speech               
  • Fed Schmid Speech
  • BoJ Tamura Speech 
  • ECB Donnery Speech
  • Fed Barkin Speech 
  • BoE Mann Speech
  • ECB Lane Speech
  • Fed Barr Speech
  • Fed Waller Speech
  • Fed Bowman Speech


TICKERS TO WATCH

  • HDFC LIFE Q2 profit up 3% YoY to Rs 447 crore as premium growth sustains
  • TATA COMMUNICATIONS transforming itself into a technology company, says CEO
  • JINDAL STAINLESS invests $150 mn to double slag processing capacity
  • Gautam Adani unveils 'Two-Track Organisation' for AI-driven transformation
  • PAYTM brings entities under direct ownership to simplify structure
  • TVS debuts in adventure touring with new Apache RTX priced at ₹1.99 lakh
  • ⁠⁠AXIS BANK Q2 profit falls 26% on RBI-advised one-time provisioning
  • ⁠CHALET HOTEL launches premium lifestyle brand Athiva, eyes rapid expansion
  • AXIS FINANCE to become upper-layer NBFC; listing likely within 3 years
  •  

MUST READ


See you tomorrow with another edition of The Morning Edge.

Have a great trading day.

Riding Giants: How India May Catch the Next Big FDI Swell

Can trade wars make India an FDI winner?

Former RBI Deputy Governor Michael Patra writes, will Trump’s tariffs divert capital from China to India’s reforming economy?

What is correct mood gauge for FDI, net or gross, and why?

More From BasisPoint