Rare Earth Export Controls Suspension Drives Market Reversal on November 7, 2025

This analysis is based on the Bloomberg report [1] published on November 7, 2025, which reported China’s formalization of rare earth export control suspensions following a U.S.-China trade truce agreement.

The market reversal on November 7, 2025, appears to have been primarily driven by China’s announcement suspending rare earth export controls, validating the thesis from the original Reddit post. The timing correlation is compelling: China’s Ministry of Commerce and General Administration of Customs jointly announced the suspension of export control measures that were originally implemented on October 9, 2025, with the suspension taking effect immediately and running through November 10, 2026 [1][3][4].

Market data shows a clear reversal pattern across major indices on November 7:

• S&P 500 (^GSPC): Reversed from -0.99% decline on November 6 to +0.49% gain on November 7 [0]
• NASDAQ (^IXIC): Recovered from -1.74% drop on November 6 to +0.49% gain on November 7 [0]
• Dow Jones (^DJI): Bounced back from -0.73% on November 6 to +0.41% on November 7 [0]

The rare earth sector experienced particularly significant gains, with MP Materials (MP) surging +12.80% and USA Rare Earth (USAR) gaining +9.73% on November 7 [0]. Both stocks substantially outperformed the broader market indices, suggesting the rare earth news was indeed a significant catalyst for the market reversal.

: This suspension was part of a broader U.S.-China trade truce reached between President Donald Trump and President Xi Jinping during their October 30, 2025 meeting at the APEC summit in South Korea [2][3]. The agreement included U.S. suspension of reciprocal tariffs on China for an additional year, halting plans for 100% tariffs on Chinese exports, extension of Section 301 tariff exclusions, and China resuming imports of U.S. soybeans and logs [2][4].

: The Russell 2000 (^RUT) showed the strongest reversal (+1.03% on November 7 vs. -1.68% on November 6) [0], suggesting the reversal was broad-based and not limited to large-cap stocks or specific sectors. This indicates the policy change had widespread market impact beyond just the rare earth sector.

: While the rare earth announcement appears to be the primary catalyst, other contributing factors included technical oversold conditions after several consecutive days of declines, ongoing government shutdown concerns affecting market sentiment, and some AI valuation concerns [5].

:

• Temporary Nature
  : The suspension is explicitly temporary (until November 10, 2026), creating ongoing uncertainty [1][4]
• Policy Reversal Risk
  : Export controls could be reinstated quickly, as demonstrated by China’s rapid implementation in October 2025 [4]
• Structural Control
  : China maintains underlying control infrastructure, allowing rapid policy changes [2]
• Market Overreaction
  : The significant gains in rare earth stocks may represent overoptimism about the durability of the policy change

:

• Implementation timeline details and administrative conditions
• Supply chain adjustments by companies in response to the policy change
• Political developments affecting U.S.-China relations and the trade truce
• Market sentiment shifts toward rare earth stocks and broader risk appetite

The evidence supports the original Reddit post’s thesis that China’s suspension of rare earth export controls was a significant factor in the November 7, 2025 market reversal, rather than AI valuation concerns being the primary driver. The temporal correlation, outperformance of rare earth stocks, and broader market recovery all point to this policy change as a key catalyst. However, the temporary nature of the suspension and underlying geopolitical tensions suggest ongoing uncertainty that should be factored into market assessments. The policy formalization represents a de-escalation in U.S.-China trade tensions, but the structural control China maintains over rare earth exports means the situation remains fluid and subject to rapid policy changes.