Markets Today: Gold Extends Rally, Japanese Bond Yields Rise, DAX Bounces Off Key Support Level

[Ben Graham]

Asia Market Wrap - Japanese Bond Yields Rise, China Service Sector Strong

Most Read: Dow Jones (DJIA) Finishes 0.57% Down After Late Recovery, What Next for Wall Street Indexes?

Japanese bonds joined counterparts from around the world as prices continue to dive.This is happening because many companies are selling new bonds, and at the same time, investors are getting worried that major countries have too much debt.

When a bond's price falls, the return you get for owning it (its 'yield') goes up, which can hurt the stock market. This has been the current market challenge at the beginning of September.

This sent Asian stocks to their lowest point in three weeks. The return on 20-year Japanese government bonds is now the highest it has been since 1999, and the 30-year bond's return is the highest it has ever been.

German bond prices have also been falling for five days straight. In the US, the return on 30-year bonds is still near 5% after a recent increase that negatively affected Wall Street.

In Japan, The Nikkei .N225 fell 0.88% to close at 41,938.89, while the broader Topix .TOPX lost 1.07% to 3,048.89, their lowest close since August 8.

A private report on China's service businesses showed that they grew at the fastest speed in over a year in August. This happened because more people, both in China and in other countries, were buying these services.

The report, called the RatingDog index which is compiled by S&P global, gave the sector a score of 53.0 last month, which was up from 52.6 in July. That's the highest score since May 2024. Any score above 50 shows that business is growing, so 53.0 is a strong signal of expansion.

Wednesday's numbers also pointed to a big increase in new customers for service companies, including a rise in sales to other countries.

European Open - European Stocks Eye Recovery

European stocks were recovering from a big drop on Tuesday. The uptick in European shares happened as the selloff in long-term bonds seemed to calm down.

The main European stock index, the STOXX 600, rose by 0.4%, with the technology sector leading the way with a 1.3% gain.

Shares of Adidas climbed 2.5% after the company Jefferies upgraded its recommendation for the German sportswear brand to "buy" from "hold." Jefferies noted that Adidas has more different ways to grow its business. The pressure on stocks eased as long-term European bonds became more stable.

This was a relief, as the main STOXX index had seen its biggest one-day drop in over a month on Tuesday due to worries about government finances. However, concerns are not completely gone, as the yields on long-term German and French bonds are still at multi-year highs.

The FTSE 100 and DAX index were both flat in early trade and hovering near key levels of support.

On the FX front, the British Pound and Japanese Yen remain under pressure due to concerns about Government finances and political uncertainty in Japan.

The US dollar benefitted as the British pound and the Japanese yen both lost value. The dollar's overall strength, measured against a basket of other world currencies (DXY), had already gone up by 0.66% on Tuesday.

Following this trend, the euro also dropped a small amount, adding to its losses from the previous day.

Meanwhile, the Australian dollar's value stayed mostly the same, and the New Zealand dollar also saw a slight decrease trading at 0.5861 to the USD.

Currency Power Balance

Source: OANDA Labs

Oil prices dipped slightly, but they remained near their highest level in a month. The prices are high mainly because the U.S. recently put new restrictions on a network of shipping companies.

Now, market participants are waiting for a meeting of major oil-producing countries (known as OPEC+) that is scheduled for this weekend. The price for Brent crude, was at $68.98 a barrel, while the U.S. oil price was at $65.46 a barrel.

For a more in depth and technical look at Oil, read WTI Oil Rallies 1% and Eyes Break of Key Confluence Level. Could a Rally to $70/Barrel Finally Materialize?

Gold prices continued to set new records on Wednesday. This is happening because of ongoing uncertainty in the financial markets and because many investors believe that America's central bank, the Federal Reserve, will cut interest rates this month.

Earlier today, the price of gold hit a new all-time high of $3,546.99 per ounce, and was recently trading at $3,536.58. At the same time, the price for contracts to buy gold in December also rose, reaching $3,602.40.

For more on the factors influencing the gold rally, read Gold (XAU/USD) Eyes Weekly Close Above $3400/oz on Renewed Haven Demand and DXY Weakness

Economic Data Releases and Final Thoughts

Looking at the economic calendar, the European session will be quiet moving forward after a host of final PMI data this morning.

Later in the day, investors will tune into comments from European Central Bank President Christine Lagarde for any insights on monetary policy, while U.S. job openings data for July is also expected ahead of Friday's NFP release.

For all market-moving economic releases and events, see the MarketPulse Economic Calendar. (click to enlarge)

Chart of the Day - DAX Index

From a technical standpoint, the DAX Index has dropped below the 100-day MA but appears to have found support at the August 4 swing low at 23471.

Immediate resistance is now provided by the 100-day MA with a break above leading to a potential retest of the 24000 handle.

There remains potential for further downside and a test of the lower band of the channel pattern which is in play. There is also support at the 23212 level which could come into a play in such a scenario.

DAX Daily Chart, September 3. 2025

Source: TradingView.com (click to enlarge)

Client Sentiment Data - DAX Index

Looking at OANDA client sentiment data and market participants are long on the DAX Index with 65% of traders net-long. I prefer to take a contrarian view toward crowd sentiment and thus the fact that so many traders are long means the DAX Index could fall in the near-term.

Follow Zain on Twitter/X for Additional Market News and Insights @zvawda

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