Stock Crash: US, China trade deal hopes spurs risk assets but one group of stocks is sulking

The rising optimism of a trade deal between the US and China has sent risk assets soaring with indices on Wall Street hitting new records on Monday. However, a section on Wall Street is not very pleased with these developments and that shows in their stock price action.

A group of US-based rare earth miners declined up to 17% on Monday, a day when all four key indices on Wall Street hit and closed at record high levels.

Shares of Critical Metals fell as much as 17% before ending the day with losses of 14%. USA Rare Earth shares fell 8%, while those of MP Materials and Trilogy Metals declined 8% and 17% respectively. Stocks of Energy Fuels and NioCorp Developments also fell 10% and 11% respectively. Most of these stocks are extending their losses during afterhours trade.

Stock	Monday's Fall
Critical Metals	-14%
MP Materials	-8%
Trilogy Metals	-17%
Energy Fuels	-10%
USA Rare Earth	-8%
NioCorp Developments	-11%

These rare earth stocks tanked after US Treasury Secretary Scott Bessent remarked that China could delay export controls on critical minerals as part of a broad trade deal with the US. The remarks came ahead of a high stakes meeting between US President Donald Trump and Chinese President Xi Jinping. Trump has expressed optimism that they will come away with a deal.

Rare earth stocks in the US had rallied at the start of the month when US President Donald Trump threatened an additional 100% tariff on Chinese exports from November 1, and China retaliated by placing further curbs on rare earth exports. China produces nearly 70% of the world's rare earth supply and processes nearly 90% of rare earth, underscoring its significance in the supply chain.

Shares of Critical Metals had surged from levels of $6 at the start of October to as high as $30 by October 14, a 5x jump in just a few days. However, the stock has now come off 60% from those levels after Monday's fall. Most of these stocks, which jumped multi-fold between September 30 to October 14, have given up most of those gains.

Stock	Price On Sept. 30	Oct. 14 High	Oct. 27 Close
Critical Metals	$6.22	$30.25	$12.97
MP Materials	$67	$100.25	$65.57
Trilogy Metals	$2.10	$11.29	$4.99
Energy Fuels	$15.35	$27.33	$19.10
USA Rare Earth	$17.19	$44	$21.60
NioCorp Developments	$6.68	$12.33	$7.31

Even shares of MP Materials, the largest rare earth miner in the US, saw its stock surge 46% from levels of $67 at the start of the month to as high as $100 by October 14. The stock has given up all of those gains and is back at levels of $65 after Monday's fall. Incidentally, the stock had also rallied after the Trump administration had signed a deal to buy a 10% stake in the company recently.