Market Commentary: Tuesday 14th October

U.S. equity futures and European indexes dropped as China launched retaliatory trade measures, reviving tensions with Washington. S&P 500 futures fell 0.7% and Nasdaq 100 dropped 1%, while Treasuries rallied and 10-year yields hovered near 4.03%. In Asia, shares were down 1.3%, led by a 3% slump in Japan’s Nikkei amid political uncertainty. Gold and silver reversed earlier gains, and the yen strengthened against the dollar.

Some trade risk is now being priced into equity markets, with concerns over whether this marks another escalation or merely tactical posturing ahead of November’s tariff deadline. China sanctioned five U.S.-linked units of Hanwha Ocean Co. in response to U.S. probes in shipping and logistics, dealing a blow to sentiment. The Fed will be alert for signs that trade stress begins to squeeze growth or inflation.

In the Middle East, Hamas released 20 Israeli hostages to the Red Cross under a U.S.-brokered ceasefire deal, while both sides continue to negotiate over exchanges of deceased hostages and security guarantees.

Data-wise, it is fairly quiet — German CPI came in as expected at 0.2% MoM this morning.

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