Markets Today: DXY Hits 7-Week Low, Nikkei Breaches 44000, French Politics in Focus, DAX Steady at Resistance

[Ben Graham]

Asia Market Wrap - Nikkei Breaches 44000

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The market shrugged off political uncertainty and rose for a fifth day as optimism about US interest rate reduction spread to Asia, fuelling a buying binge in technology shares.

The MSCI all-country stock index was on track to reach another record high. In Asia, tech companies like TSMC and Alibaba helped stock markets rise. South Korean, Taiwanese, and Hong Kong shares went up, but Indonesian shares fell after the long-serving finance minister was dismissed.

On Tuesday, Japan's Nikkei went above 44,000 for the first time ever. This was driven by optimism about a new trade deal and the possibility of more government spending.

The Nikkei 225 Index jumped by as much as 1.24% to a record high of 44,185.73 during early trading. However, some investors sold their shares to take profits, causing the index to fall back slightly to 43,732.80 by midday, a 0.2% gain.

The broader Topix index was up by 0.06% at midday, after earlier rising by 0.77%.

Japan's lead trade negotiator, Ryosei Akazawa, announced on X (formerly Twitter) on Tuesday that U.S. tariffs on Japanese cars will be lowered by September 16. This clarifies a trade deal that was made in July.

Shares continued to rise, following strong gains on Monday after the resignation of Prime Minister Shigeru Ishiba, who was known for being fiscally conservative. News agency Kyodo reported on Monday that Sanae Takaichi, a supporter of government spending and easier monetary policy, has decided to run for the leadership of the Liberal Democratic Party.

Stocks related to semiconductors rallied, following gains by their U.S. counterparts like Broadcom. This was supported by Broadcom's statement last Thursday that it expects strong revenue growth from artificial intelligence.

The biggest gainer on the Nikkei was Advantest, a company that makes chip-testing equipment and supplies Nvidia. Its shares rose by more than 7%.

Other stocks that saw notable increases were chip-making tool manufacturers Screen Holdings, which jumped 3.74%, and Tokyo Electron, which gained nearly 2%. Sony's stock also advanced by about 2%.

European Open - French Politics Casts a Shadow

After seeing gains during regular trading on Monday, European stock futures went down slightly.

Specifically, futures for the EUROSTOXX 50 index dropped by 0.2%. Futures for the FTSE and DAX indexes also dipped, by 0.13% and 0.26% respectively.

Over the last few days, markets have been through several major political events. In Britain, Deputy Prime Minister Angela Rayner resigned, and in Japan, Prime Minister Shigeru Ishiba stepped down. In France, lawmakers voted to remove Prime Minister Francois Bayrou from office. Argentina's President Javier Milei's party faced a significant loss, and Indonesia unexpectedly replaced its long-time finance minister.

Investors in Europe are now waiting to see who French President Emmanuel Macron will choose as the country's fifth prime minister in less than two years.

So far, Macron has not chosen to call an early election and seems determined to name a new prime minister, potentially from a center-left political party.

There are no rules dictating who Macron must pick or how quickly he has to make the decision, but his office has said he will appoint someone in the next few days.

Despite this political uncertainty, the price of French government bond futures in Asia has changed very little.

On the FX front, the U.S. dollar index dropped to a low of 97.323 during trading in Asia, its weakest point since July 24.

The euro gained 0.1% during trading in Asia, reaching a value of up to 1.1778, which is its highest level since July 24.

The Japanese yen became stronger against the dollar, reversing its weakness from Monday, after Prime Minister Shigeru Ishiba resigned. The yen was 0.3% stronger at 147.125 yen to the dollar as people began to speculate on who would be the next leader.

In other currencies, the Australian dollar rose by 0.2% to $0.6606, while the New Zealand dollar also went up by 0.2% to 0.5949. The offshore Chinese yuan was 0.1% stronger at 7.1193 yuan per dollar, and the British pound rose by 0.2% to 1.3576 so far today.

For more on the Euro, read EUR/USD Technical: Euro bullish breakout, what’s next?

Currency Power Balance

Source: OANDA Labs

Oil prices went up on Tuesday, continuing their gains. This was because the oil-producing group OPEC+ announced a smaller production increase than what many people expected. At the same time, there are ongoing worries that potential new sanctions on Russia could tighten the global oil supply.

Brent crude oil rose by 0.77% to $66.53 per barrel, and U.S. West Texas Intermediate crude climbed by 0.8% to $62.76 per barrel.

For more on Oil prices, read WTI Oil Rallies 1.8% as Russian Supply Concerns Outweigh Modest OPEC + Output Hike

Gold prices reached a new record high on Tuesday. The price was boosted by a weaker U.S. dollar and a drop in bond yields. Demand for gold increased because there are now stronger expectations that the US Federal Reserve will cut interest rates this month.

The price of gold was up 0.2% at $3,642.09 per ounce, after it had previously hit an all-time high of $3,659.10 earlier in the day. US gold futures for December delivery also rose slightly by 0.1% to $3,682.10.

Economic Data Releases and Final Thoughts

Looking at the economic calendar, the European session will be quiet with a couple of Central Bank policymakers from the Euro Area, SNB and BoE speaking.

Beyond that markets will keep an eye on political developments in France, as well as an Apple event later in the day which could affect Apple and US stock indices.

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 has been stuck in consolidation the last few days and remains in a channel.

At present price is in the middle of the channel and is currently testing the 100-day MA which is serving as resistance.

A clean break of this level could lead the index toward the top end of the channel with resistance at 24000 and 24080 respectively.

A failure to do so could the index revisit the recent lows around the 23470 handle before the lower end of the channel around 23212 comes into focus.

DAX Daily Chart, September 9. 2025

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