Markets Today: Gold Smashes $3900/oz, Bitcoin Hits Fresh Highs as Japan Election Triggers Frenzy. DAX Eyes Potential Rally

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Asia Market Wrap - Japan Politics Send Markets in a Tailspin, Nikkei Up 4.8%

Most Read: USD/JPY Price Outlook: Key Levels, BoJ, and Political Risks

Global markets were boosted over the weekend as stock prices soared while currencies and bonds fell. Some investors turned to gold and Bitcoin for safety as Japan’s election of a pro-stimulus leader fueled expectations for aggressive fiscal spending.

In Asia, shares jumped to new highs. The Nikkei 225 rose about 5% percent, reaching a record after Sanae Takaichi won the election as the new Prime Minister. At the same time the yen fell close to two percent, slipping to about 150 per dollar and hitting a low against the euro.

Longer term Japanese government bonds dropped sharply, as market participants are worried a Takaichi administration could issue more debt for tax cuts. The chance that the Bank of Japan will raise rates by year‑end dropped to 41%, down from 68% on Friday.

A year earlier Takaichi called a BOJ rate rise “stupid,” but she has since adopted a more cautious rhetoric, saying policy should match the government’s goals.

Many regional markets were closed for holidays, such as mainland China, South Korea and Taiwan.

Hong Kong’s Hang Seng slipped a little, 0.7%, before its Tuesday holiday. Australia’s index barely moved, still easing 0.10%, with trading in states including New South Wales and Queensland thin due to holidays.

Gold (XAU/USD) and Bitcoin Benefit from Uncertainty

Gold prices hit a major milestone on Monday, climbing past the $3,900 an ounce level for the first time ever, driven by several factors.

The metal is seeing strong demand as a safe investment due to the weaker Japanese yen and the ongoing US government shutdown. Additionally, growing expectations that the Federal Reserve will cut interest rates again are also boosting gold's appeal.

Spot gold rose 1% to $3,925.91 per ounce, after setting a new all-time record high of $3,944.63 earlier in the day. US gold futures for December delivery also climbed 1.1% to $3,951.60.

Meanwhile, Bitcoin was trading around $123,600 after hitting $125,653.32 on Sunday. Many experts are calling the move into both gold and cryptocurrencies the "debasement trade" meaning investors are using them to protect their wealth against excessive government spending and political instability.

European Session - Mixed as French Stocks Drag

European stock markets were a little quiet on Monday, with the main STOXX 600 index dipping 0.1% after briefly touching a new record high earlier in the day. The index is cooling off slightly after a very strong week last week, where it gained over 2.8%.

French stocks lagged behind the rest of Europe, falling 0.7% after the Prime Minister named a new finance minister, Roland Lescure. This political change caused Eurozone banks to dip 0.6%, led by major French lenders like Societe Generale, Credit Agricole, and BNP Paribas.

However, losses for the overall market were limited by strong gains in a few sectors. Oil and gas stocks rose 0.8% because oil prices climbed after the OPEC+ group announced a smaller production increase for November than expected. Technology stocks also advanced 0.5%, with heavyweight company ASML up 1.6%.

In company news, French kitchenware maker SEB fell sharply by 22.3% after cutting its sales and profit forecast for the year. Separately, the UK's luxury carmaker Aston Martin dropped 6.8% after warning that its full-year loss would be larger than analysts predicted.

On the FX front, the Japanese yen saw a dramatic drop on Monday, hitting its biggest one-day slide against the US dollar in five months. The yen sank 1.9% to trade at 150.35 per dollar, completely wiping out its gains from the last two months. Even more notably, the yen fell 1.7% against the euro to 176.19, reaching its weakest level since the euro was created.

With many Asian markets closed for holidays, trading activity was slow.

The US dollar index remained mostly steady at 98.083 after recent losses. The euro slipped slightly by 0.2% against the dollar, following news that the French Prime Minister named a new finance minister, a move that political rivals quickly criticized.

The New Zealand dollar (kiwi) recovered from earlier losses to trade flat, ending its six-day winning streak ahead of the Reserve Bank of New Zealand's meeting on Wednesday. The RBNZ is expected to cut its key interest rate by 0.25%.

Meanwhile, the Australian dollar was up 0.1% early on, trading at $0.6603. The British pound was down 0.2% on the day at $1.3450, and the offshore Chinese yuan was slightly weaker at 7.1456 per dollar.

Currency Power Balance

Source: OANDA Labs

The group of oil producers known as OPEC+ (which includes OPEC, Russia, and others) announced on Sunday that it will increase its oil production starting in November by a relatively small amount: 137,000 barrels per day.

They chose this modest increase, which is the same as the increase they approved for October, because they are still worried that there will soon be too much oil available on the market (a "supply glut").

Overall this year, the group has significantly increased its production targets by more than 2.7 million barrels per day, which is about 2.5% of the world's total oil demand. This change in strategy, after several years of cutting production, is intended to help the group win back market share that it previously lost to competitors, such as US shale oil companies.

Source: LSEG

Oil prices went up by about 1% on Monday.

Specifically, Brent crude rose 1% to $65.20 a barrel, and U.S. West Texas Intermediate (WTI) crude climbed 1.1% to $61.54 a barrel. However, any further price gains will likely be limited because the overall forecast for demand is still weak.

Economic Calendar and Final Thoughts

Looking at the economic calendar, the European session will bring a few data releases none of which are expected to have a high impact in nature. ECB speakers will attract more interest, starting with today’s speech by President Christine Lagarde.

News from the weekend shows that there has been very little progress toward ending the US government shutdown, which means more delays in official government economic reports. Because most data releases are paused, this will likely be another unusual week for markets, with traders paying extra attention to other major financial news.

In general, the longer the shutdown lasts, the more it could put pressure on the US dollar. However, the dollar has held up quite well so far. This suggests that the market now requires extremely negative US economic news before traders are willing to bet heavily against the dollar.

For more information on the week ahead, read Markets Weekly Outlook - Navigating the US Shutdown & Global Trends as Equity Markets Continue to Soar

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 pulled back to the top of the channel it broke out of last week.

This sets the index up for a potential 900 point rally to the upside.

Given that global equities have started the week on the front foot, European equities are lagging which could bode well for the DAX if price can hold above the 24200 level in the early part of the week.

Immediate upside resistance for now rests at 24500 before the 24665 swing high from July 10 comes into focus.

A move to the downside will face support at 24200 before the confluence area around 24000 comes into focus.

DAX Index Daily Chart, October 6, 2025

Source: TradingView.com (click to enlarge)

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