Trump’s China Strategy Sparks Rift Between Business Allies and Hardliners

Economic

Summary:

As President Donald Trump pursues a potential trade deal with Beijing, divisions are emerging within Washington’s power circles. China hawks fear the administration is prioritizing corporate interests and high-tech exports over national security...

A Shift From Confrontation to Negotiation

In his first presidency, Donald Trump reshaped U.S.–China relations through tariffs, trade wars, and export bans targeting Beijing’s technology ambitions. Now, as he seeks what he calls “a big deal” with China, many of the architects of his original hardline stance believe that the White House is drifting toward accommodation.

Trump’s team is preparing for a high-stakes meeting with President Xi Jinping, during which China is expected to push for looser investment restrictions and reduced U.S. backing for Taiwan. In return, Beijing has hinted at opening its markets to more U.S. capital and imports a proposal that has alarmed national security advocates across Washington.

Tech Titans Gain Influence as Hawks Lose Ground

Prominent technology executives particularly Nvidia CEO Jensen Huang and AI investor David Sacks are increasingly shaping the administration’s China policy. Huang, who has Trump’s ear on tech matters, has publicly criticized China hardliners, arguing that America should keep selling advanced technology to China to maintain leverage and prevent Chinese self-sufficiency.

This pragmatic approach has infuriated figures like Steve Bannon, who accused Huang of being an “agent of influence for the Chinese Communist Party.” Meanwhile, several national security voices have been sidelined or removed from key roles, including the National Security Council, which has seen a purge of advisers advocating for tougher containment policies.

Trade Deals Over Tariffs?

Despite maintaining steep tariffs on Chinese goods, Trump has relaxed export restrictions on select AI chips from Nvidia and AMD, allowing limited sales to China in exchange for a 15% government royalty. While framed as a strategic compromise, critics see it as a unilateral concession undermining America’s long-term leverage in technology competition.

This follows Trump’s decision earlier this year to save TikTok through a deal granting U.S. investors an 80% stake in the company a move hawks call politically convenient but strategically risky.

Internal Divisions in the Administration

Within the administration, tensions have escalated after the unexplained withdrawal of Landon Heid, a nominee for a Commerce Department security post known for his tough stance on China’s tech ambitions. Analysts interpret his removal as evidence of growing White House discomfort with hardline voices.

Although key figures such as Secretary of State Marco Rubio and Vice President JD Vance remain skeptical of Beijing, most have chosen to focus on other policy battles. The result is a White House increasingly shaped by business pragmatists rather than strategic hawks.

A Return to Pre-2015 Thinking

According to Derek Scissors of the American Enterprise Institute, the shift marks a return to the pre-Trump era, when corporate engagement dominated China policy. “There’s an irony,” Scissors noted, “that Trump, who once changed the tone on China, now presides over its reversal.”

Still, some believe the hawks’ caution will ultimately be vindicated. Michael Sobolik of the Hudson Institute warns that the idea of profiting from China without security risks is a dangerous illusion: “The Chinese Communist Party always finds a way to expose that fallacy.”

Trump’s evolving China strategy underscores the enduring dilemma at the heart of U.S. foreign policy whether economic engagement can coexist with national security vigilance. As talks with Xi approach, the stakes are higher than ever: Washington must decide whether to pursue short-term commercial gains or maintain a hardline defense of its technological and strategic edge.

Source: Bloomberg

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Gerik

Economic

Unions Move to Court as Layoff Threat Looms

Over the weekend, multiple federal unions filed an emergency motion in the U.S. District Court for the Northern District of California, seeking to halt any firings planned by federal agencies during the shutdown. The unions argue that the White House has no legal authority to permanently dismiss workers while Congress has yet to approve a spending bill.

The lawsuit names the Office of Management and Budget (OMB) and its director, Russell Vought, as defendants, accusing them of exploiting the funding lapse to execute reductions in force (RIFs). According to Bloomberg’s report, the OMB circulated a memo in late September directing agencies to prepare termination plans for programs deemed inconsistent with President Trump’s priorities.

Unions insist that such actions would violate federal law, as workers furloughed or working without pay are entitled to full back pay once government funding resumes.

White House Defends Position, Blames Democrats

President Donald Trump, speaking at the White House on Sunday, said layoffs were “taking place right now,” blaming Democrats for refusing to negotiate. However, it remains unclear whether any job cuts have occurred.

Kevin Hassett, the president’s chief economic adviser, said in an interview with CNN that the administration is holding off on layoffs until Monday, pending another Senate vote on a stopgap funding bill. He noted that if Democrats “remain unreasonable,” the administration would proceed with dismissals.

Republicans, while controlling both chambers of Congress, still require Democratic support to meet the 60-vote threshold in the Senate for passing the temporary funding measure, which would keep the government open until November 21.

Wider Economic Impact and Political Stalemate

The shutdown, now entering its second week, has furloughed an estimated 750,000 federal workers daily, according to the Congressional Budget Office (CBO). Federal operations have been largely suspended since October 1, with only essential services continuing.

The unions’ legal challenge, led by the American Federation of Government Employees (AFGE), seeks a temporary restraining order to prevent terminations until the court rules on the broader constitutional question.

Meanwhile, Democrats have conditioned their support for reopening the government on health care-related concessions, including the extension of Affordable Care Act (ACA) subsidies to curb rising insurance premiums.

A Legal and Political Showdown Intensifies

This case American Federation of Government Employees, AFL-CIO v. Office of Management and Budget (Case No. 25-cv-8302) could set a critical precedent in defining executive authority during funding lapses.

If the court grants the injunction, it would temporarily freeze Trump’s layoff plans and signal judicial resistance to using shutdowns as leverage for structural government downsizing.

For now, with the Senate gridlocked and no funding resolution in sight, the future of hundreds of thousands of federal workers and the stability of the U.S. civil service hangs in the balance.

Source: Bloomberg

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Economic

Commodity

A Historic Rally Driven by Political and Economic Turmoil

Gold prices climbed to an all-time high of $3,920.63 per ounce on Monday before easing slightly, continuing a remarkable rally that has lifted bullion nearly 50% year-to-date. The gains come amid rising concerns over Washington’s political paralysis, with the U.S. federal government shutdown entering its second week and delaying crucial payroll data that markets rely on to gauge economic health.

The lack of official data has left traders scrambling for alternative signals. “The backdrop is intact with the Fed on path to cut rates further, alongside the weakening labor market,” said Ahmad Assiri, analyst at Pepperstone Group Ltd., noting that while gold’s momentum remains strong, a brief pullback could mark a “healthy phase within an extended rally.”

Monetary Policy and Safe-Haven Demand Reinforce the Surge

The Federal Reserve’s rate-cutting cycle expected to include another quarter-point reduction by month’s end has provided one of the biggest tailwinds for bullion. Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold.

At the same time, global central banks continue to diversify away from U.S. dollar assets, adding more gold to their reserves to hedge against both inflation and geopolitical instability.

President Donald Trump’s renewed trade tariffs and fiscal confrontations with Congress have injected additional uncertainty, prompting investors to seek stability in hard assets.

Market Reaction and Broader Metals Outlook

As of 8:45 a.m. Singapore time, spot gold traded at $3,905.54 per ounce, up 0.5% after posting its seventh straight weekly gain on Friday. The Bloomberg Dollar Spot Index edged 0.3% higher, showing modest dollar strength despite risk aversion. Meanwhile, silver, platinum, and palladium also advanced in sympathy with gold’s bullish momentum.

Analysts warn that if the shutdown continues and the Fed proceeds with deeper rate cuts, gold could soon test the symbolic $4,000 level, setting a new benchmark in the global flight to safety.

The Risk Premium Remains Elevated

The combination of political dysfunction, weakening labor data, and central bank policy easing continues to form a potent mix for gold bulls. While some analysts anticipate near-term consolidation, most agree that structural forces from geopolitical fragmentation to U.S. fiscal instability will sustain demand for precious metals.

In short, gold’s dazzling rally reflects not only market anxiety but also a broader loss of faith in fiat stability, with the world’s oldest safe-haven asset once again at the center of a global financial storm.

Source: Bloomberg

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Samantha Luan

Forex

Economic

U.S. technology companies are delaying their decisions to lease large data centers in India, jittery from the recent souring of trade ties between New Delhi and Washington. The orders from Big Tech companies for hyperscalers, or data centers that consume vast amounts of computing power, are "still in the pipeline, but they are holding the pen and saying let me not sign it just yet," said Alok Bajpai, managing director of India for NTT Global Data Centers.

Hyperscalers, including Amazon, Microsoft and Google, currently account for about 30% of India's data center demand, a share expected to rise to 35%, according to data from property consulting firm Anarock Capital. New deals for data centers have been on hold for more than two months now, while hyperscalers may revisit their plans in the next three to six months, said a property consultant, who spoke on condition of anonymity due to business sensitivities. Clauses for tariff pass-throughs, change in law, and phased capacity are quietly becoming standard. Partner at Argus Partners Jitendra Soni Trade relations between the two countries have soured in the last two months.

In August, the U.S. imposed 25% tariffs on goods from India, before raising the levies to 50%, citing India's purchase of Russian oil. That was followed by a new $100,000 "one-time" visa fee on fresh H-1B visa applications, effective Sept. 21, announced by U.S. President Donald Trump — a move expected to hit Indian workers hardest. "The new U.S. tariffs on Indian exports have unsettled global supply chains and made equipment and input costs harder to pin down," said Jitendra Soni, a partner in the technology and data privacy practice at law firm Argus Partners.

India's data center capacity is expected to nearly triple in the next five years from 1.2 gigawatts to more than 3.5 gigawatts by 2030, according to multiple industry estimates, despite the tensions with Washington. Lower costs and rising demand in e-commerce services, cloud infrastructure and AI workloads have fueled the demand. However, the uncertainty is showing up in data-center negotiations, "where clauses for tariff pass-throughs, change in law, and phased capacity are quietly becoming standard," said Soni. A shortage of graphics processing units, or GPUs, had already slowed expansion. The latest trade frictions have added another layer of caution. "

Hyperscalers haven't vanished, but have just hit a pause," the property consultant said. Companies reportedly interested in setting up large data centers in India include Google , which was in talks with the Andhra Pradesh state government to develop a 1-gigawatt facility, and OpenAI , which is looking for partners for a similar project. "India's underlying appeal has not dimmed and remains compelling," Soni said. "But deals are now closing more slowly, and with far more lawyering around who bears the next global shock."

Source: CNBC

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Economic

Stocks

Nikkei Surges on Market Optimism

The Nikkei 225 index jumped 4.5% to 47,835.36 on Monday, marking one of its strongest single-day gains of 2025. Investors welcomed the likelihood that Sanae Takaichi, 64, will succeed outgoing Prime Minister Fumio Kishida, making her Japan’s first female leader.

Market sentiment brightened as Takaichi pledged to sustain the late Shinzo Abe’s market-friendly and nationalist economic framework, prioritizing technological competitiveness, industrial revitalization, and population resilience. Her victory revived optimism about policy stability and long-term growth potential.

Neil Newman of Astris Advisory Japan noted that the rally was largely driven by foreign investors, reflecting confidence in Takaichi’s economic direction.

Automakers and Exporters Lead Gains

Automotive and export-oriented stocks were among the day’s top performers. Toyota Motor Corp. rose 4.9%, and Honda Motor Co. advanced 4.7%, following reports that U.S. President Donald Trump may soften some tariffs on imported auto parts and materials—an announcement that could ease cost pressures for Japanese manufacturers.

The weaker yen, which slipped to 149.88 per U.S. dollar, also boosted exporters’ earnings outlooks. Analysts expect Takaichi’s anticipated fiscal stimulus to add inflationary pressure, reinforcing yen depreciation in the near term.

Regional Market Divergence

While Tokyo’s benchmark soared, other Asian markets were mixed. Hong Kong’s Hang Seng fell 0.8% to 27,930.45, Australia’s S&P/ASX 200 dipped 0.1%, and markets in China, Taiwan, and South Korea remained closed for holidays.

In global trading, U.S. crude oil gained $0.88 to $61.76 per barrel, while Brent crude climbed $0.92 to $65.45 after OPEC+ reaffirmed a modest output increase of 137,000 barrels per day in November.

Political and Economic Outlook

Takaichi, a self-described admirer of Margaret Thatcher, faces daunting challenges: reviving Japan’s productivity, countering demographic decline, and managing the world’s highest public debt ratio. Fitch Solutions’ BMI division emphasized that her leadership will test Japan’s ability to combine fiscal stimulus with structural reform.

Her ascent also underscores a symbolic milestone for Japan—a conservative female leader assuming power for the first time in a society still grappling with gender equality issues.

Global Context: U.S. Uncertainty Lingers

Meanwhile, in the U.S., Wall Street ended last week near record highs despite the ongoing federal government shutdown, which has delayed crucial labor market data. The S&P 500 edged up to 6,715.79, and the Dow Jones rose to 46,758.28, while the Nasdaq Composite eased slightly.

Investors are now watching how Japan’s leadership shift and U.S. fiscal gridlock will reshape global risk sentiment. For now, Tokyo’s surge highlights one clear message from the markets: stability and continuity still inspire confidence in uncertain times.

Source: AP

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Political

Economic

Six months after the Trump administration began its messy global tariff campaign, the euro area is weathering the storm, according to European Central Bank President Christine Lagarde. There’s been no economic shock. Inflation is under control. Tariff deals have brought relief. And investor confidence in the euro has driven it to a four-year high versus leading currencies. Even the golf went Europe’s way in the Ryder Cup tournament. But the common currency’s strength poses a threat to the bloc’s growth.

Crisis-era hotspots like Spain and Greece are in good shape but Germany and France account for half the euro area’s gross domestic product and their economies are springing leaks. Rising trade barriers are squeezing German exporters; Bloomberg Economics sees no improvement in the coming months, expecting Germany to deliver near-zero growth in the second half of the year. France, meanwhile, is reeling from a political crisis and budget uncertainty that’s holding back investment. The last time France boasted inflation well below 2% and growth of less than 1%, the ECB was slashing interest rates to below zero.

The euro’s strength looks more problematic in this light. The dollar’s 11.8% slide versus the common currency this year looks increasingly driven by investor positioning as the White House pushes domestic currency weakness as a path to prosperity. That has the painful side-effect of adding to tariff pressures that make euro-area exports less competitive. Even more glaring is the Chinese yuan’s 16.4% decline versus the European currency over the past three years, reflecting Beijing’s determination to keep its own export engine whirring at Europe’s expense. The trade war is being lost on both fronts.

The ECB doesn’t seem to be in a hurry to respond. Frankfurt’s rate-setters officially have no mandate to target exchange rates, for one thing. They also probably have no desire to emulate the Swiss National Bank’s $42 billion war chest of US tech shares, part of a toolkit that’s earned Bern a Trumpian tongue-lashing over “currency manipulation.” They also traditionally see the positives of a stronger euro as keeping inflation in check and adding a feather in the cap of reserve-currency status.

But the pressure may only increase; analysts expect the euro to keep appreciating, and its growth-smothering negatives will become harder to ignore. ECB Vice President Luis de Guindos has explicitly said that a euro changing hands for more than $1.20 — compared with about $1.17 currently — will “make things much more complicated.” Most vulnerable are the cash-strapped, unpopular governments struggling to deliver anything close to Mario Draghi’s vision of a more cohesive and faster-growing continent, moving ahead with more joint debt issuance to build the technological, defense and infrastructure assets of tomorrow.

What Lagarde and her colleagues should do — that even the SNB can’t — is ditch complacency and use the wiggle room they have to cut interest rates further. Swiss rates are at zero; the euro area’s benchmark is at 2%. Hawks will howl that this will let loose inflationary spirits, but that’s hard to square with the surge in Chinese goods landing on European shores, the recent disappointing economic data and, indeed, the euro’s strength. Trade deals haven’t changed the outlook that much, as Lithuania’s central bank chief Gediminas Simkus has pointed out.

These are unusual economic times. Washington is out-protecting Brussels while Beijing is out-competing Berlin. Currencies are now an extension of politics by other means. Weathering the foreign exchange storm won’t provide much comfort if European firms continue to invest billions into the US while Russian drones fly overhead. While the euro area gathers its geopolitical strength, at least let its currency be weaker.

Source: Bloomberg Europe

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Economic

Forex

Stocks

Tata Capital Ltd. is poised to start taking orders for an initial public offering that may raise as much as 155 billion rupees ($1.7 billion), India’s biggest deal of its kind this year, and putting the country’s hot IPO market on course for a record month.The shadow lender’s shares, which are expected to start trading on Oct. 13, are being offered at 310 rupees to 326 rupees each until Wednesday, valuing the company at as high as 1.4 trillion rupees ($15.7 billion). That would make the unit of the Tata Group worth more than double HDB Financial Services Ltd., which went public earlier this year.

Tata’s offering will be followed by LG Electronics Inc.’s Indian unit in another billion-dollar IPO launch the next day, a sign that confidence is growing about investor demand being able to absorb such large issuances despite the headwinds faced by the local stock market. All in all, Indian IPO proceeds could climb to a record in October, exceeding $5 billion.“There is now ample capacity to absorb supply,” said Raghuram K, a partner at Uniqus Consultech. Mutual funds are awash with money flowing in through monthly investment plans, giving them the confidence to keep deploying capital, he said.

As for Tata’s offering, it will involve the sale of as many as 475.8 million new and existing shares by Tata Capital, its parent and International Finance Corp., according to the IPO prospectus.For investors, the Tata Capital deal is a chance to own shares in the financial services unit of one of India’s largest and most-reputed conglomerates — the Tata Group — and it is set to be the nation’s biggest IPO since Hyundai Motor India Ltd.’s record $3.3 billion offering last year.The company, incorporated in 2007, offers a range of financial products and services to retail, corporate and institutional clients. Its assets under management stood at 2.33 trillion rupees as of June 2025, catering to 73 million customers.

Tata Capital looks attractive because the company offers a resilient business model with a focus on sustained growth, supported by a diversified asset mix, ICICI Direct Research wrote in a note to clients.At the high end of their marketed range, Tata Capital shares could still be a bargain at 3.4 times book value, according to SBI Securities. That would make it cheaper than peers such as Bajaj Finance Ltd., Cholamandalam Investment and Finance Co. and HDB Financial Services Ltd., according to data compiled by Bloomberg.

In fact, Tata Capital shares were recently trading at more than double the high end of their marketed range in the unlisted market, according to InCred Money.More broadly, the IPO rush has been powered by rising corporate ambitions in one of the world’s fastest-growing major economies, a strong pool of domestic capital and a seemingly insatiable appetite for new listings among millions of retail investors with rising incomes.Companies have been able to raise money even as India’s stock market has lost momentum in 2025 after an unprecedented nine-year rally, weighed down by concerns over a slowdown in earnings growth as well as US-India tensions.

With 2025 proceeds at $11.2 billion as the third quarter ended, India emerged as the world’s fourth-busiest IPO market this year based on fundraising volume, according to data compiled by Bloomberg. That follows last year’s record tally of $21 billion.JPMorgan Chase & Co., JM Financial Ltd. and Kotak Mahindra Capital Co. are among those who have predicted the boom to continue, with regulatory changes also adding to the optimism. India’s securities regulator last month tweaked norms to make it easier for very large private firms to go public, while the central bank recently relaxed rules on loans to investors participating in IPOs.