Week:
S&P500: -1.3% FTSE100: -0.3% Gold: +1.9% Bitcoin: -6.5%
YTD:
S&P500: 13.2% FTSE100: 14.5% Gold: +55% Bitcoin: +23.5%
Tariff Shock Rocks Markets, Then Quickly Rebounds
Source: Connect Weekly | Week ending 11 October 2025
US stocks endured their sharpest selloff since April after President Trump reignited trade tensions with China on Friday, only for futures to rebound over the weekend as the rhetoric softened. The S&P 500, Nasdaq 100, and Russell 2000 spent most of the week carving out fresh record highs before the tariff shock wiped out gains into the close. By Sunday, however, the “TACO” (Trump Always Chickens Out) trade was back, with futures reclaiming most of Friday’s losses.
What drove markets this week
The week started on a strong note, with all three major indices closing at record highs on Monday. AI stocks dominated early gains after AMD struck a multibillion-dollar chip deal with OpenAI, a move that sent shares in Seagate, Cipher Mining, and Super Micro Computer surging while weighing on Nvidia. Oil rose after OPEC+ announced a smaller-than-expected November production increase.
On Tuesday, AI enthusiasm cooled as chipmakers sank following reports that Oracle lost around $100 million renting access to Nvidia’s new Blackwell chips. Defensive names led while tech and consumer discretionary lagged. Wednesday brought a rebound to fresh records after Fed minutes confirmed that most officials support two more rate cuts this year. Gold extended its rally, while Thursday’s session saw the streak stall as every major sector finished lower except consumer staples.
Friday: Stocks hammered by tariff turmoil
Markets plunged after President Trump said on Truth Social that he was considering a “massive increase” in tariffs on Chinese imports. The S&P 500 posted its worst day since April, with consumer staples the only sector to finish in positive territory. Trump added that he was weighing “many other countermeasures” in response to China’s new export restrictions on rare earth metals and appeared to cancel his planned meeting with President Xi in South Korea. The late-session drop erased the week’s earlier gains and rattled risk sentiment across markets.
Weekend: Tensions cool, markets bounce
Over the weekend, both Trump and Vice President JD Vance played down the dispute. Trump posted a follow-up message on Truth Social de-escalating the situation, helping futures surge. By Monday morning, S&P 500 futures had regained roughly 150 of the 250 points lost on Friday, reviving optimism that the selloff was more of a shakeout than the start of a new trade war.
Looking ahead
Investors now turn to whether this apparent truce holds and if China responds in kind. With the CPI report delayed by the ongoing government shutdown, traders will keep focusing on earnings, Fed speakers, and the durability of this weekend’s rally. After a volatile week, sentiment has stabilised, but another round of tariff rhetoric could easily knock it off balance again.
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