Markets Today: Gold Slips Over 2% as Risk Appetite Returns, Takaichi Makes History as First Female PM, Earnings in Focus

[Redator]

Asia Market Wrap - Nikkei Prints Fresh All-Time Highs

Global stock markets continued to rally on Tuesday, with Asian shares and Japan's main index hitting new record highs, as trade tensions eased and investors grew confident about future interest rate cuts.

The regional stock index for Asia surpassed its previous peak, and a global index is also poised for a new high.

Japanese stocks soared, with the key Nikkei 225 Index closing 0.3% higher at an unprecedented 49,316.06. This rally was driven by the confirmation that pro-stimulus candidate Sanae Takaichi won a crucial parliamentary vote to become the next Prime Minister, which investors see as a signal for continued loose money policies.

The yen weakened, while Japanese government bonds (JGBs) strengthened, reflecting expectations of increased government spending under Takaichi's leadership.

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Source: LSEG

Chinese stocks also continued to gain as investors chose to overlook recent data showing that the country's economic growth has slowed to its slowest level in a year.

UK Public Sector Borrowing Below Forecasts

UK public sector net borrowing (excluding public sector banks) widened to £20.2 billion in September 2025 from £18.6 billion in the same month last year, but slightly below market expectations of £20.5 billion. This was the highest September borrowing since 2020

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Source: ONS

It was also the second-highest year-to-date borrowing since records began in 1993, following the pandemic period. Public sector net debt, excluding public sector banks, stood at 95.3% of GDP.

European Session - Stocks Edge Higher as Sentiment Improves

European stocks edged slightly higher on Tuesday, building on a strong Monday, with investors focusing on company news and the possibility of easing trade tensions.

The main STOXX 600 index rose 0.1%. Sector performance was mixed, with banks and aerospace & defense stocks seeing modest gains, while healthcare and technology saw small dips.

Swedish lockmaker Assa Abloy jumped 3.4% after reporting better-than-expected profits. French benefit card provider Edenred surged 10.9% on strong sales. HSBC rose 1.7% after naming a new CEO for its U.K. business.

To prevent an escalation of tariffs, U.S. Treasury Secretary Scott Bessent is scheduled to meet with Chinese Vice Premier He Lifeng this week to resume trade negotiations.

On the FX front, the US dollar strengthened slightly on Tuesday, while the Japanese yen weakened following political news.The dollar index rose 0.16%.

The Japanese yen was the weakest currency, falling 0.4% against the dollar, which traded at 151.38 yen. This decline happened after the market focused on the election of pro-stimulus hardliner Sanae Takaichi as Japan's next prime minister, which suggests interest rate hikes by the Bank of Japan may be delayed. The yen also struggled against the euro and British pound, which both gained against it.

The Australian dollar fell slightly by 0.21%. Meanwhile, the onshore Chinese yuan firmed up, or gained slightly, after the country's central bank set the official daily trading range at the strongest level seen in a year.

Currency Power Balance

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Source: OANDA Labs

Oil prices dropped for the second day in a row on Tuesday, pressured by concerns about global oversupply and the risk that the trade dispute between the US and China will weaken energy demand.

The international benchmark, Brent crude, fell by 0.49% to $60.71 a barrel. The US benchmark, WTI, also slipped by about 0.5% for both its expiring November contract and the more actively traded December contract, leaving WTI futures at $56.71. Prices continue to be weighed down by reports from the International Energy Agency predicting a growing supply glut in 2026.

Gold prices dropped slightly on Tuesday, as the US dollar gained strength and investors sold off some of their holdings to lock in profits after a massive rally.

The day before, gold had hit a fresh record high due to strong investor demand, which was driven by two main factors: expectations that the US Federal Reserve would cut interest rates soon, and high demand for gold as a safe investment during uncertain times (like the ongoing government shutdown and trade fears).

Spot Gold has fallen as much as 2.3% to trade at $4254/oz at the time of writing.

Read More:

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• Netflix (NFLX) Q3 2025 Earnings Preview: Decoding Netflix's Shift to Profitability-Driven Growth (ARM)
• 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. Markets do seem more optimistic at the start of this week that a deal could be reached and we are seeing this in early European trade.

Ahead of the US session markets will brace for the continuation of US earnings releases with some companies such as General Motors, Verizon and Coca-Cola among other reporting ahead of the market open.

The US session remains light with the highlight coming from Canada with the release of Canadian inflation data as well as a speech by Fed policymaker Waller.

Netflix will be the main earnings release after the market close tomorrow and could have implications for Nasdaq 100 as well.

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

Chart of the Day - FTSE 100 Index

From a technical standpoint, the FTSE 100 has broken back above the 200-day MA but is flirting with the idea of a pullback, currently trading below the 200-day MA.

A four-hour candle close below the 200-day MA could lead to move lower toward support at 9357 and a retest of the 100-day MA at 9344.

If the FTSE is able to maintain the bullish momentum from yesterday, the next key area of resistance rests at 9500 before the 9587 handle comes into focus.

FTSE 100 Index Daily Chart, October 21. 2025

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Source: TradingView.com (click to enlarge)

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