The infoshot to help kick-start your week
Markets hit by blows on Friday
All US markets fell sharply on Friday following Trump’s threat to impose an additional 100% tariff on China from as soon as November.
Earlier in the week, China added five new rare earth minerals (holmium, erbium, thulium, europium and ytterbium) to its control list. This takes the total number of restricted minerals to twelve. China has effectively developed a monopoly on rare earth minerals, and these additions will have a major impact on the US. The US are heavily reliant on China to not only source the minerals but to process them too. According to a US Geological Survey report, between 2020 and 2023, 70% of US imports of rare compounds and metals came from China. The US only has one operational rare earth mine and they still have to send heavy rare earths to China for processing. This dependency is one of the key reasons the US wanted a minerals deal with Ukraine and why Trump has one eye on Greenland. The artic island is home to the eighth largest reserve of rare earth materials.
Over the weekend, Beijing accused the US of “double standards”. A commerce ministry spokesperson said China could introduce “countermeasures” if Trump carries out his threat and said they were “not afraid” of a trade war. On Sunday, Trump posted on Truth Social, “Don’t worry about China, it will all be fine.” As I write this morning, the FTSE and other European markets have risen as investors respond positively to Trump’s signal that he would be open to backing down and beginning talks with Xi Jinping.
Over in Japan, the optimism surrounding Sanae Takaichi’s appointment to lead the Liberal Democratic Party (LDP) was wiped when its ruling coalition collapsed after the Komeito party left the coalition. The party quit over a payments scandal that has dogged the LDP this year. The collapse doesn’t rule Takaichi out of becoming the next prime minister, but it does complicate matters.
The Nikkei 225 finished 1% down today as the political uncertainty continues to worry investors. Most other Asian markets have also taken a hit overnight following the release of figures showing Chinese exports to the US in September fell by 27% compared to the year before. Conversely the data also showed worldwide exports were 8.3% higher and reached a six-month high in September.
BoE joins AI worriers and Reeves finds £3bn to add to her budget
Here in the UK, the Bank of England (BoE) added its voice to the growing number of investors and institutions worried about the AI spending boom and the potential of a bubble burst.
Major players like OpenAI, Oracle and Anthropic have seen their valuations go through the roof this year. This led the BoE’s financial policy committee to warn on Wednesday that “the risk of a sharp market correction has increased” because “valuations appear stretched… leaving equity markets particularly exposed should expectations around the impact of AI become less optimistic.” According to research by the Massachusetts Institute of Technology (MIT) 95% of organisations are getting zero returns from their investments in generative AI. The Bank, and other analysts, are concerned that valuations could tumble if AI progress and adoption slows down.
Thanks to errors in recent public finance data, Rachel Reeves will have an extra £3bn in her upcoming budget. The Office for National Statistics (ONS) blamed the mistake on HMRC’s VAT receipts data. The error meant public borrowing figures had been out by £200mn to £500mn a month since January.
Gold and silver reach record highs as crypto takes a battering
As investors try to hedge against the ongoing global trade turmoil, slowing global growth and increasing concerns about the AI boom, gold and silver broke more records last week. Gold went past $4,000 per ounce for the first time, and silver reached a 45-year high of over $50 per ounce on Thursday.
Cryptocurrencies went in the opposite direction. Bitcoin fell 12% following Trump’s tariff threat and more than $19bn of bets were wiped out as investors moved money to stablecoins and traditional safe-haven assets like gold and silver.
Coming Up:
- German CPI, Tuesday 14 October at 10:00am
- UK GDP, Thursday 16 October 2025 at 08:30am
- Eurozone CPI, Friday 17 October 2025 at 05:00am
Notice:
For regulated financial advisers and investment professionals only, Copia does not provide financial advice, and the contents of this document should not be taken as such. The performance of each asset class is represented by certain Exchange Traded Funds available to UK investors and expressed in GBP terms selected by Copia Capital Management to represent that asset class, as reported at previous Thursday 4:30pm UK close. Reference to a particular asset class does not represent a recommendation to seek exposure to that asset class. This information is included for comparison purposes for the period stated but is not an indicator of potential maximum loss for other periods or in the future.
