Markets Today: China GDP Beat, US-China Deal Optimism Grows, Gold Steady as FTSE 100 Edges Higher

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Asia Market Wrap - Nikkei Rises 3.4%

Most Read: Silver (XAG/USD) Technical Outlook: Silver Price Consolidates Ahead of Next Move. Where to Next?

Asian stock markets surged to record highs on Monday, fueled by a renewed sense of optimism over cooling trade tensions and positive political news from Japan.

The broad regional stock index climbed 1.7%, with markets anticipating gains in the US and Europe. Japan's stock market soared to a new record high after the announcement of a coalition deal that is expected to lead to higher government spending.

The deal included specific plans, such as a 10% reduction in the number of lawmakers. This anticipation of pro-stimulus policies boosted investor confidence, weakening the yen and causing the blue-chip Nikkei share index to climb by 3.4% at the close

Even with data released today showing that Chinese economic growth has slowed to its lowest pace in a year, investors in Chinese stocks largely overlooked the deceleration, focusing instead on the hope for trade de-escalation between the US and China.

China Economy Remains Resilient

China's economy showed better-than-expected growth in the third quarter, signaling that the government is confident in achieving its economic goals.

Official data released on Monday indicated that the economy grew by 1.1% compared to the previous quarter, which was better than expected. Factory production (industrial output) also performed strongly, rising 6.5%.

Although the overall annual growth rate of 4.8% was the slowest seen in a year, this result means China is still on track to meet its official annual growth target of around 5%. By releasing these figures,

Beijing is sending a clear message that its current policies are effective and the country is capable of reaching its major economic development goals.

European Session - European Stocks Led Higher by Bank, Defense Stocks

European stocks opened strongly on Monday, gaining nearly 1%, led by a significant rebound in the banking and defense sectors.

The main STOXX 600 index for Europe rose by 0.9%. Banks, which had suffered a 2.5% drop on Friday due to concerns about loan problems at US regional lenders, saw a strong bounce back, rising 1.6%. Similarly, the aerospace and defense sector climbed 2.1%, recovering from a fall triggered by news of a planned peace summit for the war in Ukraine.

In company news:

• Gucci owner Kering jumped 4.2% after agreeing to sell its beauty business to L'Oreal.
• Cement maker Holcim rose 1.4% after announcing it would acquire German company Xella.
• Swedish defense firm Saab gained 3.1% after securing a contract for artillery radar in Spain.
• However, French car parts supplier Forvia lost 6% after reporting a drop in its third-quarter sales.

The positive market sentiment occurred despite data showing that German producer prices (a measure of wholesale inflation) fell more than expected in September.

On the FX front, the Australian dollar rose on Monday, boosted by positive signals from its top trading partner, China.

The Japanese yen initially weakened against the dollar, which climbed as much as 0.4% to 151.20, because investors were confident that pro-stimulus candidate Sanae Takaichi would become Japan's next prime minister after securing key political support.

However, this weakness quickly faded after a central bank official, Hajime Takata, reiterated his call to raise interest rates, which strengthened the yen.

Elsewhere, the Australian dollar gained 0.3%, the euro saw a small gain of 0.1%, while the British pound edged down 0.1%.

China's currency, the yuan, remained largely unchanged.

Currency Power Balance

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Source: OANDA Labs

Oil prices dropped on Monday, extending their recent losses, as investors worried about a global oversupply of oil and the threat of weaker demand due to trade tensions and a slowing economy.

The international benchmark, Brent crude futures, fell by 0.86% to $60.76 a barrel, while US crude, West Texas Intermediate (WTI) futures, dropped by 0.96% to $56.99. Both contracts erased gains from Friday and continued a pattern of decline, having dropped more than 2% last week for their third straight weekly loss. This persistent downturn is partly fueled by forecasts from the International Energy Agency (IEA) predicting a growing surplus of oil supply in 2026.

Oil prices dropped again on Monday, continuing their third straight weekly decline, as worries about a huge global oversupply of oil combined with lower demand forecasts due to US-China trade friction.

International benchmark Brent crude fell by 0.86% to $60.76 a barrel, and US crude, WTI, dropped by 0.96% to $56.99, erasing gains from Friday.

Gold prices edged slightly higher on Monday, maintaining their record-high levels, while silver attempted a small recovery after a sharp drop on Friday.

Spot gold rose 0.1% to $4,254.59 per ounce, and US gold futures climbed 1.3%. Silver prices rose 0.2%, recovering slightly after plunging 4.4% on Friday, the same day it had hit a new record high of $54.47.

Read More:

• Silver (XAG/USD) Technical Outlook: Silver Price Consolidates Ahead of Next Move. Where to Next?
• Gold (XAU/USD) rallies to all-time highs of $4218 on trade tremors and rate cut expectations - Potential targets and price forecast
• EUR/JPY Forecast: Support at 175.00 Holds the Key to Immediate Bullish Continuation

Economic Calendar and Final Thoughts

The most important issue for financial markets right now is the unstable relationship between the US and China, particularly ahead of two critical dates.

Presidents Trump and Xi are scheduled to meet around October 29-31 at the APEC summit in Korea, just before the November 10th deadline when US tariffs on Chinese goods are set to jump significantly if no agreement is reached.

Markets do appear more upbeat at the start of this week that a deal may be reached between the US and China.

Later in the day markets will brace for Canadian PPI data and a few ECB policymakers speaking which could stoke some volatility.

For more information on the week ahead, read Markets Weekly Outlook - Tesla, Netflix Earnings, US CPI and China's Five-Year Plan in Focus as US-China Tensions Simmer

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Chart of the Day - FTSE 100 Index

From a technical standpoint, the FTSE 100 has broken back above the 200-day MA on Friday with the index eyeing a potential test of the 100-day MA at 9433.

A break above the 100-day MA is needed if the FTSE is to continue its advance today.

The RSI period-14 is hovering just below the 50 level which says that bearish momentum is still in play.

A break above could be a sign that momentum is shifting to the bulls.

Immediate support rests at 9357 before the 9338 and 9285 handles come into focus.

Immediate resistance rests at 9433 before the 9500 and 9550 handles come into focus.

FTSE 100 Index Daily Chart, October 20. 2025

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Source: TradingView.com (click to enlarge)

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