Rare-earth spat stokes trade tensions

Global markets were rocked by a cascade of geopolitical and economic shocks, led by Donald Trump’s surprise announcement of 100% tariffs on all Chinese imports last Friday, which triggered a sharp sell-off across equities and commodities. The move, part of a broader escalation over rare-earth metal exports, wiped out more than $2.5 trillion in market value and sent the VIX volatility index soaring by almost 30%. Meanwhile, the US government shutdown entered its third week, stalling federal spending and clouding economic forecasts. 

In the UK, GDP data showed the UK economy remains in the doldrums, a significant problem for the government ahead of the key Autumn Budget statement at the end of November. Bank of England Governor Andrew Bailey warned of slack in the labour market, which was interpreted by some as a sign the central bank was prepared to cut interest rates soon, despite stubborn inflationary pressures. The third-quarter earnings season has started with a degree of optimism. LVMH’s surprise growth lifted the valuation of its luxury-goods sector peers, with Dutch semiconductor manufacturing equipment maker ASML and Taiwanese contract chipmaker TSMC posting strong earnings and confident outlook statements amid continuing demand for artificial-intelligence (AI) technology.

The spot price of silver surged to an all-time high of more than $52 per ounce in London, marking a dramatic rally driven by a confluence of market forces. A severe short squeeze in London, where liquidity has all but vanished, has pushed prices sharply higher, with traders scrambling to cover positions amid a physical shortage of the metal. The squeeze has created a rare price premium between London and New York, prompting some to ship silver across the Atlantic to capitalise on arbitrage opportunities. Six tips for investing in gold, silver & other commodities.

The FTSE 100 was down 1.4% over the week by mid-session on Friday, with the more UK-focused FTSE 250 trading falling 0.9%.

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Donald Trump

Global markets recovered some of their losses during the week after recoiling on Friday when President Donald Trump reignited trade tensions with China. He announced a sweeping 100% tariff on all Chinese imports effective 1 November. The move, framed as retaliation for Beijing’s new export controls on rare earth minerals, triggered the worst single-day sell-off in US equities since April, with the S&P 500 plunging 2.7%, the Nasdaq Composite down 3.6%, and the Dow shedding nearly 880 points. Investors were further unnerved by Trump’s threat to cancel a planned meeting with President Xi Jinping and his vow to impose export restrictions on critical US-made software. The escalation comes amid a flurry of tit-for-tat measures: China began levying steep port fees on US-owned vessels on Tuesday, mirroring similar charges introduced by Washington. Meanwhile, Trump’s administration rolled out new tariffs on kitchen cabinets, vanities, and furniture – ranging from 25% to 50% - citing national security concerns and the need to revive domestic manufacturing. These also came into force on Tuesday. The escalation reignited concerns about inflation and disrupted supply chains. 

President Trump intensified his diplomatic push to end the war in Ukraine, announcing plans for a second summit with Vladimir Putin in Budapest following what he described as a “very productive” two-hour phone call with the Russian leader. Trump criticised Putin for prolonging the conflict, saying it “makes him look very bad”, and warned that if Moscow doesn’t move toward peace, the US may supply Ukraine with long-range Tomahawk missiles – a move the Kremlin called a dangerous escalation. While Trump has expressed frustration with Putin’s reluctance to engage directly with Ukrainian President Volodymyr Zelensky, he remains optimistic that his recent success brokering a ceasefire in Gaza could serve as a model for Eastern Europe. The planned summit, hosted by Hungary’s Viktor Orbán, has drawn scrutiny from European leaders wary of US concessions, but Trump insists “great progress” is possible if both sides commit to serious negotiations.

Donald Trump’s Justice Department indicted John Bolton, his former national security adviser, the third of his prominent political adversaries to be indicted in the last few weeks. This follows legal action against former FBI director James Comey and New York Attorney General Letitia James. Mr Bolton faces 18 counts for allegedly retaining and transmitting classified defence documents, including materials tied to weapons of mass destruction. Mr Comey, the former FBI director fired by Trump in 2017, was charged with lying to Congress and obstructing a congressional proceeding. Ms James, the New York Attorney General who previously won a civil fraud case against Mr Trump, was indicted for bank fraud over a mortgage application. All three deny wrongdoing, and legal experts warn the cases – brought by Trump-appointed prosecutors – raise serious concerns about the politicisation of the justice system. Trump has publicly called for their prosecution, framing the indictments as part of his vow to hold “corrupt elites” accountable, while opponents argue the charges reflect a dangerous erosion of democratic norms.

Autumn Budget

The Institute for Fiscal Studies (IFS) think tank issued a stark warning ahead of the UK’s Autumn Budget, urging Chancellor Rachel Reeves to avoid “half-baked fixes” and instead pursue meaningful tax reform to address the estimated £30bn–£50bn fiscal black hole. While Ms Reeves has pledged not to raise headline rates of income tax, National Insurance, or VAT, the IFS argues that tens of billions could still be raised through smarter, fairer changes – such as reforming council tax bands, ending capital gains tax relief on death and tightening pension tax perks. The think tank cautioned that simply hiking rates without tackling inefficiencies in the current system could harm growth and deepen inequality. It also highlighted the government’s reliance on ambitious public sector productivity gains, warning that failure to deliver could force further spending cuts or tax hikes. The IFS called the upcoming Budget a critical opportunity to reshape the UK’s tax landscape and restore fiscal credibility. When is the Autumn Budget?

UK consumers are growing more cautious ahead of the Autumn Budget. UK retail sales growth slowed to 2.3% year-on-year in September 2025, according to the British Retail Consortium (BRC), marking a deceleration from August’s 3.1% rise – a slowdown that the BRC said reflected growing consumer caution ahead of the November Budget. The slowdown was driven by a mix of inflationary pressures, tax uncertainty, and unseasonably warm weather, which dampened demand for autumn goods like coats and boots. Food sales rose 4.3%, largely due to price increases rather than volume growth, while non-food sales edged up just 0.7%. Retailers are bracing for a challenging “golden quarter”, with major chains like John Lewis and J Sainsbury ramping up seasonal hiring but warning that spending remains highly targeted. The data underscores the fragile state of consumer confidence and raises concerns about the impact of potential tax hikes on both household budgets and retail sector investment. 

Economics

UK wage growth slowed slightly in the three months to August, with average earnings excluding bonuses rising by 4.7% year-on-year, down from 4.8% in the previous period, according to the Office for National Statistics. While still outpacing inflation, the deceleration signals a cooling labour market, with unemployment edging up to 4.8% - its highest level in more than four years. Public sector pay growth remained strong at 6%, buoyed by early-year settlements, while private sector wage growth lagged at 4.4%. Wage growth is a critical factor in the Bank of England’s decision-making process on interest rates, as it directly influences inflationary pressures across the economy. When wages rise faster than productivity, businesses often pass those costs onto consumers, fuelling inflation and complicating the Bank’s efforts to bring price growth back to its 2% target. Recent data showing persistent strength in pay – particularly in the private sector – has raised concerns among policymakers that inflation could remain sticky, even as other indicators suggest economic cooling. 

IPOs

Revolut’s long-delayed UK banking licence remains mired in regulatory scrutiny, raising concerns about its readiness for a potential IPO. Despite receiving a restricted licence in 2024, the fintech giant has yet to exit the “mobilisation” phase – a probationary period meant to last no more than 12 months – due to lingering doubts from the Prudential Regulation Authority over its risk controls and governance amid rapid global expansion. The delay has been compounded by past issues with financial reporting and share structure, as well as the sheer scale of Revolut’s UK customer base. While the licence is seen as pivotal to legitimising Revolut’s banking ambitions and boosting investor confidence, the uncertainty surrounding full authorisation could complicate its IPO timeline and valuation, potentially prompting the company to consider listing outside the UK. 

Companies

Five major carmakers – Mercedes-Benz, Ford, Peugeot/Citroën, Renault and Nissan – are currently on trial at the UK High Court in what is being described as the largest class action in English and Welsh legal history, stemming from the long-running “Dieselgate” emissions scandal. The companies are accused of installing illegal “defeat devices” in diesel vehicles – software designed to detect when a car was undergoing emissions testing and temporarily reduce pollution output to meet regulatory standards. Outside of test conditions, however, the vehicles allegedly emitted far higher levels of nitrogen oxides, contributing to air pollution and misleading consumers about their environmental impact. The trial, which could affect up to 1.6 million UK motorists and potentially expand to include 14 car brands, seeks to determine whether these manufacturers breached emissions laws. If found liable, a separate compensation phase could follow in 2026, with claims potentially worth up to £6bn. All five companies deny the allegations.

Lloyds Banking Group warned that its potential liability from the UK’s car finance mis-selling scandal could reach nearly £2bn, after setting aside an additional £800m to cover compensation and operational costs. The Financial Conduct Authority (FCA) is proposing a redress scheme for around 14 million motor finance agreements – many involving discretionary commission arrangements (DCAs) – which allowed brokers to inflate interest rates for higher commissions, often without customers’ knowledge. Lloyds, the UK’s largest motor finance lender, argues the FCA’s methodology overstates consumer losses and could result in payouts exceeding actual harm, with some customers potentially receiving more than 100% of the commission back. The bank plans to challenge the regulator’s approach, citing concerns over fairness and legal precedent. The scandal, described as one of the largest since PPI, has triggered sector-wide provisions and could reshape the future of car finance in Britain.

BP’s third-quarter trading update painted a mixed picture as the energy giant flagged stronger upstream production and refining margins but warned of a weak oil trading performance. Output rose quarter-on-quarter, driven by increased gas volumes from its US shale unit and low-carbon energy operations, while refining margins jumped to $15.8 per barrel from $11.9, adding an estimated $300m–$400m to earnings. However, oil trading results were described as “weak”, reversing gains seen earlier in the year, and gas marketing was only average. BP also expects up to $500m in asset impairments and confirmed net debt will remain broadly flat at $26 billion. The update comes amid a strategic reset, with the company under pressure from activist investors to simplify its portfolio and refocus on core oil and gas assets. Full results are due on 4 November.

Vodafone faced a major network outage on Monday, leaving more than 130,000 customers across the UK without broadband and mobile services during peak afternoon hours. The disruption, which began around 3pm, affected both home internet and 4G/5G mobile connectivity, with widespread reports from cities including London, Manchester, and Glasgow. Customers were unable to access Vodafone’s website, app, or customer service lines, compounding frustration. The company later confirmed the outage was caused by a “non-malicious software issue” from a vendor partner and said services were gradually recovering. 

Whitbread reported a 7% drop in adjusted pre-tax profits and a 2% decline in revenue in its interim results, citing flat UK accommodation sales and a weaker food-and-beverage performance. The company downgraded its full-year profit guidance for Germany to “up to £5 million”, from a previous range of £5m-£10m, blaming softer market conditions and fewer high-impact events. Despite the dip, chief executive Dominic Paul highlighted strong progress on strategic goals, including expanding Premier Inn’s footprint and acquiring eight new hotels in Germany, with a long-term target of 98,000 rooms by 2030. Whitbread reaffirmed its commitment to returning £2bn to shareholders via share buybacks and dividends, although investor reaction was cautious, with shares falling sharply after the statement.

Bellway delivered a robust set of full-year results, reporting double-digit growth across key metrics despite a challenging housing market. Completions rose 14.3% to 8,749 homes, driving revenue up 16.9% to £2.78bn, while underlying operating profit surged 27.5% to £303.5m, supported by a margin uplift to 10.9%. The FTSE 250 housebuilder ended the year with £41.8m in net cash, reversing a prior debt position, and announced a £150m share buyback programme. However, Bellway flagged a softer start to fiscal 2026 amid affordability pressures and weak consumer sentiment, with reservation rates dipping in recent weeks.