Markets Today: Gold in Focus as China Cuts Tax-Break, Asian Factory Orders Slump and FTSE 100 Breaks Trendline

Most Read: Markets Weekly Outlook - BoE Meeting in Focus, US Government Shutdown Continues

Asian stock markets increased on Monday. This was mainly because of two positive factors: a temporary pause in the US-China trade dispute and a big rise in investments in artificial intelligence (AI). This made investors feel more willing to take risks.

Meanwhile, the US dollar got stronger, reaching its highest point in three months, because recent statements from central bank officials suggested they might not cut interest rates as soon as expected.

The overall Asia-Pacific shares index (excluding Japan) the MSCI climbed by 0.63% to 729.82, staying close to the 4 and a half-year high it reached last week. This index has already gone up by over 27% this year, making it likely to be its best year since 2017.

Japan's markets were closed for a holiday today.

Lastly, South Korea's Kospi index soared over $2\%$ to another new record high. China's main stocks were up 0.1%, and Hong Kong's Hang Seng Index also increased by 1%.

Asian factories had a tough time starting up in October, according to business reports released on Monday. The main problems were low demand from the United States and the negative impact of tariffs imposed by President Donald Trump, which hurt factory orders across Asia.

Although Trump's recent visit to Asia brought a bit of progress in trade talks with countries like China and South Korea, companies that export goods are still worried about how much the US will buy.

The latest private surveys, the PMIs, showed that manufacturing slowed down in China and shrank in South Korea in October. Crucially, the export orders declined in both countries.

This confirmed earlier official Chinese data from Friday, which showed that Chinese factory activity had shrunk for the seventh month in a row. This indicates that the previous rush to export goods before US tariffs took effect has clearly ended.

European stock markets remained mostly stable on Monday as new company earnings reports came out. For example, reports were released by the liquefied natural gas (LNG) company GTT and the Dutch firm PostNL.

However, the stock of the drinks maker Campari fell after the company became involved in a tax evasion investigation.The main pan-European STOXX 600 index stayed firm at 572.29 points, remaining near the low point it reached last week.

Shares of GTT rose by 4.3% after the French company, which specializes in LNG storage systems, increased its expected annual revenue and profit. The overall oil and gas sector was the best performer, jumping 1.1%.

The energy sector got an extra boost as BP's stock climbed 1.7% after the UK company announced it would sell off parts of its US oil and gas business for $1.5 billion.

In contrast, Campari's stock slid 4% after Italian tax police seized shares worth $1.29 billion euros from a holding company that controls the drinks group, alleging tax evasion.

Also, PostNL dropped almost 4% after the Dutch postal company reported a bigger quarterly operating loss than analysts expected. The company blamed this on increasing pressure on its mail business as the amount of mail decreases and revenue becomes focused on just a few large customers.

On the FX front, the US dollar remained strong on Monday, staying near its highest value in three months. Investors were waiting for important economic data this week to figure out how healthy the US economy is and whether that information might make the Federal Reserve change its current plan, which is to keep interest rates high. The dollar's overall value against other major currencies held steady at 99.73, close to its highest point since August.

Meanwhile, the Japanese yen remained weak, near an eight-and-a-half-month low. This is because there is a large difference in interest rates between the U.S. and Japan. The yen was also near its lowest value ever against the euro, trading at 177.86 per euro.

The New Zealand dollar was close to a six-and-a-half-month low, last trading at 0.5730. The Australian dollar managed to rise slightly by 0.2% to 0.6566. This was partly because many expect the Reserve Bank of Australia to keep its interest rates unchanged on Tuesday, following a surprisingly high measure of underlying inflation.

Finally, the euro dropped to a three-month low and was last valued at 1.1536. The British pound also slipped by 0.19% to 1.3145 ahead of the Bank of England's decision this week, where the central bank is also expected to keep rates the same

Currency Power Balance

Oil prices increased on Monday because a group of oil-producing countries known as OPEC+ decided to keep oil production steady (not increase it) for the beginning of next year. This decision helped calm worries that there would be too much oil supply.

However, the rise in oil prices was limited by disappointing factory data that came out of Asia.Specifically, Brent crude oil futures rose by 28 cents, or 0.43%, reaching $65.05 a barrel.

US West Texas Intermediate crude oil was also up 25 cents, or 0.41%, trading at $61.23 a barrel. It's worth noting that even though they decided to hold off on future hikes, OPEC+ had agreed on Sunday to slightly raise output by 137,000 barrels per day in December, matching the small increases planned for October and November.

As of Saturday, China changed a long-time tax break for some gold sellers.1 This move could potentially slow down the huge rush to buy gold in the country, which is the world's largest gold market.The government is removing the full 13% tax exemption (Value-Added Tax or VAT) on gold that retailers sell to customers, if that gold was originally bought from the Shanghai Gold Exchange or the Shanghai Futures Exchange.

Instead of the full exemption, the break will be lowered to 6% starting on November 1st. This partial exemption will last until the end of December 2027.

Following this news, the price of spot gold briefly fell below $4,000/oz on Monday. Gold prices are currently trading near that level, having already dropped about 9%-12% since hitting a record high earlier.

Markets are optimistic once more following the announcement of a potential framework for a US-China deal.

The European session will bring some comments from ECB officials after last week's ECB meeting.

Markets are also waiting for comments from Federal Reserve officials which will come after ISM manufacturing PMI data releases from the US.

From a technical standpoint, the FTSE 100 has broken below the ascending trendline hinting at a deeper correction.

Fundamentals do however remain positive for equities and this makes any potential trade an interesting proposition.

Looking at the period-14 RSI and it remains above the 50-mark which is a sign of bullish momentum.

If the 50 neutral level on the RSI holds, this could set the tone for further upside.

FTSE 100 Index Daily Chart, November 3. 2025

Follow Zain on Twitter/X for Additional Market News and Insights @zvawda