Markets Today: Gold Sails Past $4000/oz, Yen Slides to Fresh Lows & RBNZ Deliver 50 bps Rate Cut. DAX Ready to Rally?

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Asia Market Wrap - Stocks Retreat Tracking Wall Street

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

Asian stocks fell taking their cues from Wall Street. Market participants are starting to become more careful because they are worried that stock prices have gone too high (stretched valuations) and that too much money is being invested into Artificial Intelligence.

This caution is making them doubt whether the recent market gains will last.

As a result, Asian stocks are heading for their biggest drop in two weeks, following declines in both the MSCI All-Country World Index and the U.S. S&P 500, both of which slipped after a seven-day winning streak.

Since the stock markets in China and South Korea were closed for a long holiday, the focus was elsewhere. Hong Kong's Hang Seng Index fell by 1%. Meanwhile, Japan's Nikkei index pulled back slightly, easing 0.35%, after it had reached a record high in the previous trading session.

On the data front, Wednesday showed Japanese wage growth slowing to its weakest pace in three months, with real pay continuing its downward streak. This adds further confusion for market participants hoping for a Bank of Japan rate hike in the near future.

RBNZ Deliver 50 bps "Circuit Breaker" Cut

The Reserve Bank of New Zealand (RBNZ) decided to cut its main interest rate by 50 bps, bringing the rate down to 2.5%. This was a bigger cut than most people expected, as many thought it would only be 25 basis points. This move pushes borrowing costs down to their lowest level since the middle of 2022.

Officials said the economy still has spare capacity and activity at home is soft, and they fear cautious households and firms could still slow the recovery, so they chose an easing. Inflation sits near the top of the 1‑3% band, but it may fall back to the 2% centre by mid‑2026 as pressure on tradable goods eases.

Headline inflation is about 3% in Q3, driven by higher admin prices, food and import costs, although core non‑tradable inflation keeps easing. Supply limits and policy uncertainty keep activity weak, while consumer spending edges up. The Committee says it could ease further if needed to keep inflation near 2% target.

European Session - Bank & Energy Stocks Lead Gains

European stock markets edged up slightly on Wednesday, with the main STOXX 600 index rising 0.2%. Gains were led by the banking and energy sectors, though overall growth was limited by sharp declines in both automobile and technology stocks.

The Italian stock index stood out with a 0.5% gain. The bank sector was the biggest gainer, rising 0.7% with strong performance from British, French, and Italian lenders. Oil and gas stocks also added 0.4% as oil prices continued to climb.

However, the automobile sector fell 1.5% after Germany's BMW dropped 5.3%. BMW cut its profit forecast for 2025 due to changes in US tariffs and slower growth in the Chinese market. Rival Mercedes also fell 3.1%.

Technology stocks declined 1.1%. This followed news that US lawmakers are calling for wider bans on selling chipmaking equipment to China, hurting chip-related companies like ASML.

Market participants are also keeping a close eye on France, where President Emmanuel Macron is facing growing pressure to either step down or call an immediate parliamentary election due to the deepening political crisis. Despite this, the French stock index managed a small 0.2% gain early in the day.

On the FX front, the US dollar surged to its strongest level against the Japanese yen in almost eight months during Asian trading on Wednesday. The dollar rose as much as 0.5% to trade at 152.64 yen, as investors focused on the expected economic policies of Japan's new political leader, Sanae Takaichi.

Separately, the New Zealand dollar (kiwi) tumbled by as much as 1% to a low of 0.5739. This sharp drop came after the Reserve Bank of New Zealand surprised the market by cutting its main interest rate by a larger-than-expected 50 basis points.

This volatility spread to the neighboring Australian dollar, which slipped 0.4% to 0.6558.

Overall, the dollar index (which measures the dollar's strength against other currencies) rose as much as 0.4% to 98.9320, its highest level since early August. This was partly due to US President Donald Trump's threat to fire a large number of federal workers.

Against the dollar, the euro was down 0.4% at $1.1617, and the British pound fell 0.3% to 1.33885.

Finally, the offshore Chinese yuan was mostly unchanged, trading at 7.1466 yuan per dollar.

Currency Power Balance

Source: OANDA Labs

Oil prices increased by about 1% on Wednesday. Investors largely ignored earlier worries about too much oil supply, as they had already processed the news that the OPEC+ group plans to limit its production increase for next month.

Specifically, Brent crude rose 0.96% to $66.08 a barrel, and US West Texas Intermediate (WTI) crude climbed 1.07% to reach $62.39.

For more on the OPEC + output hike and Oil prices, read OPEC + Delivers Modest Output Hike, Brent Crude Rises 1.7%. What Next for Oil Prices?

Gold prices reached a significant milestone on Wednesday, climbing above the $4,000/oz mark for the first time ever, setting a new record.

This surge is due to investors looking for a safe place to put their money because of growing economic and geopolitical uncertainty. The price is also being boosted by strong expectations that the US Federal Reserve will cut interest rates again.

Spot gold rose 0.9% to trade at $4,017.16 per ounce. US gold futures for December delivery also gained 0.9% to reach $4,040 per ounce.

Most Read: Gold (XAU/USD) set to challenge $4,000 as prices renew all-time highs in today’s session - Potential targets and price forecast

Economic Calendar and Final Thoughts

Looking at the economic calendar, it is a rather quiet day from a data perspective for both the US and European sessions.

There is once again a host of speakers from the Federal Reserve, ECB and BoE throughout the day. Later in the US session, market participants will be waiting on the release of the Federal Reserve minutes from the September meeting.

The release may prove interesting especially with the appointment of Stephen Miran ahead of the September meeting. It will be interesting to gauge where Federal Reserve policymakers stand in terms of rate cuts moving forward.

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.

The DAX has consolidated over the last two days but does appear primed for a rally today with a positive start to the European session.

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 8, 2025

Source: TradingView.com (click to enlarge)

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