2025-10-06 04:34

A look at the day ahead in European and global markets from Kevin Buckland Politics was firmly back in the driver's seat of global markets on Monday, not least after a surprise weekend win for right-wing fiscal dove Sanae Takaichi that sets her up to be Japan's first female prime minister. Sign up here. The Nikkei (.N225) , opens new tab sliced through several big psychological levels in the first minutes of trading in setting a fresh all-time high not far from 48,000. Long-dated bond yields , meanwhile, jumped to be just shy of record peaks on worries about the country's finances. Short-dated yields pulled back sharply and the yen plunged to an unprecedented low versus the euro on speculation Takaichi could pressure the Bank of Japan to delay further rate hikes. At the same time, gold extended its record rally to just $75 short of $4,000 per ounce, while bitcoin vaulted above $125,000 for the first time on Sunday. The ostensible driver is the U.S. government shutdown, which is shaping up to be a protracted affair, as another vote failed in the Senate on Friday and Republican President Donald Trump threatened more funding cuts to Democratic states and more firings of federal workers. The reasons for the record rallies in alternative assets might run deeper though, as faith in the value of fiat currencies - already battered by the White House's open and active pursuit of a weaker dollar - takes another blow from Takaichi's ascension. JPMorgan calls it the "debasement trade". What's in store today for European stocks - already perched at record highs - is less clear, with futures currently more or less flat. While Japanese stocks are soaring, most other major Asian markets are closed today, or thinner than usual. Mainland China, Taiwan and South Korea are shut, while Hong Kong trading is sandwiched between the weekend and a holiday on Tuesday. Australian markets are open, but half of the country's states and territories have holidays today, including the most populous, New South Wales. There's little in the way of data on Europe's docket, with regional construction PMIs providing the highlight. There are plenty of central bank speakers though, including ECB President Christine Lagarde and Bank of England boss Andrew Bailey taking the podium at separate venues. Kansas City Fed chief Jeffrey Schmid is also scheduled for speaking duty. Key developments that could influence markets on Monday: -European construction PMIs (Sep) -Euro-area retail sales (Aug) -ECB President Lagarde speaks in Strasbourg, ECB Vice-President de Guindos and Bank of Spain Governor Escriva speak in Madrid, ECB chief economist Lane speaks in Frankfurt -BoE Governor Bailey speaks in Edinburgh -Kansas City Fed President Schmid speaks in Kansas City -U.S. government shutdown https://www.reuters.com/markets/europe/global-markets-view-europe-2025-10-06/

2025-10-06 04:00

TOKYO, Oct 6 (Reuters) - Sanae Takaichi, who is set to become Japan's new prime minister, will likely tolerate another 25-basis-point interest rate hike by January next year if the economy is in firm shape, said Takuji Aida, who is widely considered as among her closest advisers on economic policy. But such a move would be on condition the Bank of Japan (BOJ) maintains relatively loose monetary policy with no further rate hikes likely until 2027, Aida, who is currently chief Japan economist at Credit Agricole, wrote in a research note on Saturday. Sign up here. "The new administration will likely move steadfastly towards aggressive fiscal policy to protect people's livelihood," Aida said. To align with the government's focus on reflating growth, the BOJ will be required to maintain accommodative monetary policy, he added. "Takaichi will tolerate another 25-basis-point rate hike by January next year on condition the BOJ keeps monetary policy loose, and solid economic health and sufficient wage growth can be foreseen" despite the hit from U.S. tariffs, he said. Aida is considered as one of Takaichi's reflationist-minded advisers who have proposed bigger spending, backed by low BOJ interest rates, to revitalise the economy. Japan's ruling party picked Takaichi, seen as an advocate of expansionary fiscal and monetary policy, as its head on Saturday, putting her on course to become the country's first female prime minister. The Nikkei share gauge surged past the 47,000 level for the first time and the yen slid on Monday, as markets priced in the chance of big spending and reduced bets of a rate hike at the BOJ's next policy meeting on October 29-30. The BOJ ended a decade-long, massive stimulus last year and raised short-term interest rates to 0.5% in January on the view Japan was on the cusp of durably achieving its 2% inflation target. Governor Kazuo Ueda has signaled the BOJ's readiness to keep raising interest rates if economic and price developments move in line with its forecasts. The yen swaps market on Monday indicated a 41% likelihood of a rate hike by December, down from 68% on Friday. https://www.reuters.com/world/asia-pacific/takaichi-could-tolerate-another-boj-rate-hike-by-january-economic-adviser-says-2025-10-06/

2025-10-06 00:41

Takaichi set to become Japan's first female prime minister Takaichi's policies may delay BOJ's rate hike plans Euro highest against yen since euro introduction in 1999 Euro down vs dollar and sterling after new French PM quits Fed funds futures imply over 95% chance of October US rate cut NEW YORK, Oct 6 (Reuters) - The Japanese yen and euro weakened against the dollar on Monday on fiscal and political stability concerns after Japan's ruling Liberal Democratic Party elected a new leader and France's new government quit. The yen declined after Japan's ruling party picked conservative Sanae Takaichi, an advocate of late premier Shinzo Abe's "Abenomics" strategy to boost the economy with aggressive spending and easy monetary policy, as its head on Saturday. Sign up here. Her victory caused traders to reduce bets that the Bank of Japan will hike interest rates this month. "It was unexpected that it was going to be Takaichi," said Sarah Ying, head of FX strategy, FICC Strategy at CIBC Capital Markets in Toronto. "There's a little bit more focus on the back end of the curve now, just given that Takaichi is generally seen as a follower of Abenomics. The market expects a little bit more fiscal stimulus there." The dollar at one point rose more than 2% to 150.47 yen, the highest since August 1. It was last up 1.87% at 150.2, and if sustained, that would be its biggest daily gain since May 12. The Bank of Japan maintained on Monday its cautiously optimistic economic outlook but warned of nagging uncertainty over the impact of U.S. tariffs on corporate profits, suggesting its preference to wait for more data before raising interest rates. The euro reached 176.25 yen, the highest since the single currency was introduced in 1999. The euro slid against the dollar and the pound, however, after France's new Prime Minister Sebastien Lecornu and his government resigned on Monday, hours after announcing his cabinet line-up, making it the shortest-lived administration in modern French history. "It's not really too much of an existential crisis, it doesn't look great domestically given especially what's going on with the budget," said Ying. "The biggest risk is really if (President) Macron resigns, but it doesn't seem to be a high-risk scenario." The euro was last down 0.26% at $1.171. It earlier reached $1.1649, the lowest since September 25 . It also dipped against the pound to its lowest since September 18. The European Central Bank may need to reduce borrowing costs slightly if the risk of inflation going too low increases, but interest rates are appropriate now, the ECB's top brass said on Monday. The dollar index rose 0.4% to 98.11. Traders are waiting for signs that the U.S. federal government will reopen, with Congress so far unable to pass a bill to continue funding operations. The shutdown is leaving a void of U.S. economic data, with last Friday's closely watched monthly jobs report for September delayed along with other key releases until the government reopens. That has also resulted in lower market volatility. "Financial market volatility has dropped significantly since the start of the US government shutdown. Risks to US economic activity and the labour market from furloughing, or even terminating employment of, federal workers will not be apparent for a while," Barclays analysts led by Themistoklis Fiotakis said in a report. The Federal Reserve is widely expected to cut rates by 25 basis points at its October 28-29 meeting, following data that shows a weakening labor market. Traders are also pricing in 83% odds of an additional cut in December, according to the CME Group's FedWatch Tool, though this will likely depend on data released before then. In cryptocurrencies, bitcoin was last up 2.24% at $125,530, after hitting a record high of $125,835.92. https://www.reuters.com/world/asia-pacific/yen-sinks-takaichi-win-spurs-bets-fiscal-easing-2025-10-06/

2025-10-06 00:13

Nikkei surges past 48,000 after Takaichi's election Market bets for BOJ rate hike fall Yen weakens, bond yields fluctuate amid policy expectations TOKYO, Oct 6 (Reuters) - Japanese shares surged to a record high on Monday, while the yen and long-term bonds tumbled as Sanae Takaichi was all but confirmed to become the country's next premier, stoking bets on a revival in big spending and loose monetary policy. The Nikkei 225 Index (.N225) , opens new tab soared 4.75% to close at 47,944.76. It traded as high as 48,150.04, breaking through three psychologically key thousand-point barriers for the first time ever. The broader Topix gauge (.TOPX) , opens new tab jumped 3.1%. Sign up here. The 30-year Japanese government bond (JGB) plunged, sending the yield to a record high. Meanwhile, the yield on the two-year note slid, reflecting expectations of later rate hikes by the Bank of Japan. The yen tumbled nearly 2% against the dollar and traded at an all-time low versus the euro. Takaichi was considered to have the most expansionist fiscal and monetary agenda among five candidates in the Liberal Democratic Party race to replace hawkish Prime Minister Shigeru Ishiba. "The Nikkei was on course to reach as high as 48,000 by year-end, but because Takaichi was chosen as the LDP leader, it shot up toward that level already," said Hitoshi Asaoka, the chief strategist at Asset Management One. "The market welcomes her spending policy, but whether she can achieve that goal is not certain, as the LDP is still a minority party. The Nikkei may retreat once before year-end." NEW POLICY DYNAMICS Takaichi began eyeing cabinet posts on Monday, with media reporting she planned to install former defence minister Minoru Kihara as chief cabinet secretary and bring back ex-foreign minister Toshimitsu Motegi as the country's top diplomat. Her pick for finance minister, which will be closely watched by investors, was unclear. In the lead-up to the LDP race, a "Takaichi trade" emerged - long on stocks and bearish on Japanese government bonds, particularly longer maturities - positioning for a win by the veteran lawmaker who is a devotee of the "Abenomics" stimulus policies of the late Shinzo Abe. Yields on two-, five-, and 10-year JGBs had all reached levels not seen since the financial crisis in 2008 in the run up to the LDP election on bets the BOJ could raise rates as early as this month's meeting. Long-term JGB yields had fallen, flattening the so-called yield curve. In a run-off vote on Saturday, Takaichi beat farm minister Shinjiro Koizumi, who was seen as more laissez-faire on monetary policy. "The market had bet that Koizumi would win, and they were positioned for curve flattening," said Miki Den, the senior Japan rate strategist at SMBC Nikko Securities. "But because the bet on Koizumi was so strong, it will take time to unwind the flattening positions." The yen sank 1.8% to 150.13 yen versus the dollar and weakened to 176.22 against the euro , an all-time low. The yen swaps market on Monday indicated a 41% likelihood of a rate hike by December, down from 68% on Friday. As a candidate, Takaichi proposed boosting investment in strategic business sectors, including artificial intelligence, semiconductors, nuclear fusion and defence. Shares in those sectors were among the biggest gainers in Tokyo trading. Mitsubishi Heavy Industries (7011.T) , opens new tab, a major military contractor, jumped 11%, and Japan Steel Works (5631.T) , opens new tab, a supplier of nuclear energy machinery, soared more than 15%. Yields on long-term debt face upward pressure on expectations Takaichi will push for more deficit spending, adding to concerns about Japan's creditworthiness. The yield on the 40-year JGB , the longest tenor, soared 12.5 basis points to 3.505%. The 30-year yield briefly reached 3.29%, an all-time high. An auction of 30-year JGBs on Tuesday will be closely watched for signs of concerns about Japan's finances and debt management under Takaichi. Despite a modest issuance amount, the debt sale "is expected to be weak because investors —wary of higher term-premia after Ms. Takaichi's ascent and possible fiscal stimulus— are reluctant to add long-duration risk," Shoki Omori, the chief desk strategist at Mizuho Securities, wrote in a note. After her LDP victory, Takaichi told a press conference the government and central bank must work closely to ensure Japan's economy achieves demand-driven inflation backed by rising wages and corporate profits. https://www.reuters.com/world/asia-pacific/japans-nikkei-surges-record-after-election-win-by-fiscal-dove-takaichi-2025-10-06/

2025-10-06 00:04

Oct 6 (Reuters) - Gold surged past $3,900 an ounce for the first time in early Asian trade on Monday, as safe-haven demand from a U.S. government shutdown added to the momentum from expectations of more Federal Reserve rate cuts. Spot gold gained 0.6% to $3,910.09 per ounce by 23:53 GMT on Sunday, while U.S. gold futures for December delivery gained 0.7% to $3,935. Sign up here. https://www.reuters.com/world/india/gold-smashes-through-3900oz-notch-record-high-2025-10-06/

2025-10-05 23:25

OPEC+ November supply hike stable from October at 137,000 bpd Refinery maintenance to limit oil demand in Q4, analysts say Weak demand outlooks in Q4 to also cap near-term gains NEW YORK, Oct 6 (Reuters) - Oil prices gained about 1% on Monday after the OPEC+ production increase planned for November was more modest than expected, tempering some concerns about supply additions, though a soft outlook for demand is likely to cap near-term gains. Brent crude futures settled 94 cents, or 1.46%, higher at $65.47 a barrel, while U.S. West Texas Intermediate crude was at $61.69, up 81 cents, or 1.33%. Sign up here. "The market feel that the actual amount of oil that is going to hit the market is far less than what they announced, given that some of the OPEC+ members are already producing at capacity," said Andrew Lipow, president of Lipow Oil Associates. On Sunday, the Organization of the Petroleum Exporting Countries, plus Russia and some smaller producers, said it would raise production from November by 137,000 barrels per day, matching October's figure, amid persistent concern over a looming supply glut. In the run-up to the meeting, sources said although Russia was advocating for an increase of 137,000 bpd to avoid pressuring prices, Saudi Arabia would have preferred double, triple or even four times that to quickly regain market share. The modest production update also comes at a time of rising Venezuelan exports, the resumption of Kurdish oil flows via Turkey, and the presence of unsold Middle Eastern barrels for November loading, PVM Oil Associates analyst Tamas Varga said. Saudi Arabia kept unchanged the official selling price for the Arab Light crude it sells to Asia. While refining sources in Asia surveyed by Reuters had expected a slight increase, those expectations diminished as concerns about rising Middle Eastern crude supply felled the premium to a 22-month low last week. In the near term, some analysts expect the refinery maintenance season starting soon in the Middle East will help to cap prices. The Kirishi oil refinery, one of Russia's largest, halted its most productive crude unit following a drone attack and subsequent fire on October 4, with its recovery expected to take about a month, two industry sources said on Monday. Expectations of weak demand fundamentals in the fourth quarter are another factor limiting the market's upside. U.S. crude oil, gasoline and distillate inventories rose more than expected in the week ended September 26 as refining activity and demand softened, the Energy Information Administration said last week. "If we see a steadier rise in production then the downside in oil prices may be contained. Much now depends on whether the U.S. economy can reaccelerate over the rest of 2025 and into 2026, which would help demand immensely," said Chris Beauchamp, chief market analyst at IG Group. https://www.reuters.com/business/energy/oil-prices-open-up-around-1-after-modest-opec-output-hike-2025-10-05/