A mans good word and a hand shake is all you need.

To borrow and rephrase one of the most famous lines in sports history, they think it’s all over, well, it wasn’t. The investing community had assumed the tariff wars were over, but they received a stark reminder on Friday when Trump responded to China’s restrictions on exports of rare earth elements and equipment by imposing a new 100% tariff on all Chinese goods. The S&P 500 experienced its worst day since April on Friday, with tech stocks, as expected, taking the biggest hit. Tariffs remain his preferred policy when defending America’s interests. The rare earths are vital to a range of technologies from electric vehicles to wind turbines and defence systems. Chinese companies currently control more than 90% of the world’s processing capacity for rare earths. Trump has also threatened to call off talks with Xi scheduled for the end of the month.

Markets in Asia, which tend to react sharply in times of uncertainty, have behaved with a degree of calm overnight. Futures this morning are indicating Europe will open essentially unchanged, and after the big sell-off on Friday, the S&P is expected to recover some of its losses. It would appear markets have once again taken the view that a compromise will be found and the impact limited, at least in the short term.

As papers are full of articles about stock market AI bubbles, it is fair to say that sentiment, as we have been pointing out, has got ahead of itself, and it probably would not take much to bring a dose of reality; a period of consolidation wouldn’t be a bad idea. In the past week, any number of things could have unsettled investors, such as the ongoing resolution on the debt ceiling and the collapse of First Brands, to name a couple.

Looking to the week ahead, it will be the turn of company earnings, starting with JPMorgan on Tuesday. Aside from the earnings themselves, this earnings call is always of interest as Jamie Dimon provides his views on the current state of the US economy. Several US banks will follow this week, and then next week, we’ll see a broader range of industries start to report.

It’s a slightly busier week on the economic front for the UK as speculation continues for what Ms Reeves has planned for us in next month’s budget. We get the monthly UK employment data on Tuesday, focusing on the unemployment rate and average earnings. Then on Thursday, Industrial production and the monthly GDP report will be released, along with the 3-month average. As for the US, the ongoing Fed shutdown means no jobless reports will be released on Thursday.