Asian stock markets started the week on a firm footing Monday, with most regional indices advancing as signs of progress in a trade standoff between the United States and Canada helped to boost risk sentiment.

A dip in the US dollar, driven by concerns that upcoming US jobs data might show enough weakness to justify larger Federal Reserve rate cuts, also contributed to the positive mood.

Indian benchmarks, including the Sensex, are expected to open higher.

A significant development over the weekend saw Canada announce on Sunday that it had rescinded its digital services tax.

This move, a clear concession to pressure from President Donald Trump, is aimed at advancing trade negotiations between the two countries.

The talks are now focused on reaching a deal by a new deadline of July 21, extending from President Trump’s original July 9 deadline for his “reciprocal” tariffs.

Officials have suggested that most of these deals could now be finalized by the September 1 Labor Day holiday. This easing of trade tensions provided a supportive backdrop for Asian markets.

This bullish sentiment spilled over into Japan’s Nikkei, which rose an impressive 1.6%, while South Korean stocks gained 0.8%.

However, MSCI’s broadest index of Asia-Pacific shares outside Japan dipped a slight 0.2%.

Chinese blue chips edged up 0.2%, as recent surveys showed a slight improvement in manufacturing activity in June, while the services sector also picked up.

The positive mood was also reflected in futures markets. In Europe, EUROSTOXX 50 futures rose 0.2% and DAX futures gained 0.3%, though FTSE futures were flat.

There was no doubting the continued demand for the US tech sector and its megacap growth stocks, including Nvidia (NVDA.O), Alphabet (GOOGL.O), and Amazon (AMZN.O).

Nasdaq futures rose another 0.4%, while S&P 500 e-minis added 0.3%.

While trade news was positive, investors are also keeping a wary eye on the progress of a huge US tax-cutting and spending bill, which is slowly making its way through the Senate.

There are signs it may not pass by President Trump’s preferred July 4 deadline.

The Congressional Budget Office has estimated the bill could add $3.3 trillion to the nation’s debt, which will test foreign appetite for US Treasuries in the long run.

Indian markets set to continue positive momentum

Indian stock market benchmark indices, the Sensex and Nifty 50, are likely to open higher on Monday, tracking the upbeat cues from global markets.

Easing tensions in the Middle East between Israel and Iran, alongside optimism over US-China trade deals, are contributing to this positive outlook.

The trends on Gift Nifty also indicate a positive start for the Indian benchmark index. The Gift Nifty was trading around the 25,770 level, a premium of nearly 20 points from Nifty futures’ previous close.

This follows a strong previous session where the Sensex surged 303.03 points, or 0.36%, to close at 84,058.90, and the Nifty 50 settled 88.80 points, or 0.35%, higher at 25,637.80.

All eyes on US jobs data and Fed policy

The major focus for global markets this week will be the US payrolls report.

Due to a US holiday on Friday, the data is being released a day early. Analysts are forecasting a rise of 110,000 jobs in June, with the unemployment rate expected to tick up to 4.3%, its highest level in almost a year.

The resilience of the US labor market has been a key reason why the majority of Federal Reserve members have stated they can afford to wait before cutting interest rates, allowing them more time to gauge the true impact of tariffs on inflation.

Therefore, a weak jobs report would likely stoke speculation of a rate cut as early as July, rather than the more widely expected September.

“While initial jobless claims retreated somewhat from their recent high, continuing claims jumped higher yet again,” noted Michael Feroli, head of US economics at JPMorgan.

“Consumers’ assessment of labor market conditions also deteriorated in the latest confidence report.” Feroli believes these developments suggest “that the unemployment rate in June should tick up to 4.3%, with a significant risk of reaching 4.4%.”

Such an outcome would almost certainly see futures markets increase the probability of a July rate cut from the current 18% and price in more than the present 63 basis points of cuts anticipated for this year.

The prospect of an eventual policy easing from the Fed has helped US Treasuries weather concerns about the US budget deficit and the massive borrowing it entails.

This has also put pressure on the US dollar.

Fed Chair Jerome Powell will have an opportunity to reiterate his cautious outlook when he joins several other central bank chiefs at the European Central Bank forum in Sintra on Tuesday.

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Gold prices rose slightly on Monday, but the precious metal is likely to struggle to make further gains amid improved market sentiment. 

Expectations of more frequent and sooner-than-anticipated interest rate cuts by the US Federal Reserve (Fed) could weaken the greenback. 

This, in turn, may support dollar-denominated commodity prices, as a softer greenback makes gold more affordable for international purchasers.   

“Nonetheless, improved risk sentiment due to the US-China trade agreement, along with the ceasefire deal between Israel and Iran could diminish bullion’s appeal as a traditional safe-haven asset,” Lallalit Srijandorn, editor at FXStreet, said in a report. 

At the time of writing, the most-active gold contract on COMEX was at $3,291 per ounce, up 0.1% from the previous close. 

Among other precious metals, silver prices on COMEX were 0.4% lower at $35.91 per ounce, while platinum was 1.8% higher at $1,375.7 an ounce. 

Risk appetite rises

“The slowdown in geopolitics has offered an opportunity for investors to start taking profit because of the forward-looking prospects of some kind of kinetic war with China and the developments in the Middle East,” said Daniel Pavilonis, senior market strategist at RJO Futures.

Bloomberg reported on Friday that top advisers to US President Donald Trump anticipate finalising agreements with up to a dozen of the country’s largest trading partners by the July 9 deadline.

Additionally, US Treasury Secretary Scott Bessent announced on Friday that Washington and Beijing have successfully resolved issues concerning the shipment of rare earth minerals and magnets.

David Morrison, senior market analyst at Trade Nation said: 

The lessening in geopolitical tensions, together with the improved outlook as far as President Trump’s trade wars are concerned, were good excuses for the sellers to come out in force.

Gold prices were around $3,280 this morning, a minor support level it has maintained over the last month.

Central banks purchase more gold

Central banks continue to show strong demand for gold. 

A recent survey by the Official Monetary and Financial Institutions Forum (OMFIF) revealed that one-third of the 75 central banks questioned intend to purchase gold within the next one to two years.

Within the next decade, 40% of central banks plan to take this action.

The euro and the Chinese renminbi, alongside gold, are gaining favor as 70% of central banks report that the political climate in the US is a deterrent to investing in the dollar.

Last year, an ECB study indicated that the euro dropped to third place among leading reserve currencies, behind gold. 

This trend is further supported by a recent World Gold Council survey, which revealed that central banks plan to increase their gold purchases over the next year.

“Central bank gold purchases therefore remain an important support factor for the gold price,” Carsten Fritsch, commodity analyst at Commerzbank AG, said. 

Technical outlook bearish

The further recovery in gold price appears at risk as the daily technical setup indicates bearish potential, Dhwani Mehta, senior analyst at FXStreet, said in a report.

Market participants will remain focused on trade negotiations. Additionally, speeches from several Federal Reserve policymakers later on Monday will be closely scrutinised.

The daily moving average convergence divergence (MACD) has returned to neutral, but its downward trajectory and gradient indicate growing downside momentum, according to Trade Nation’s Morrison.

Should gold fail to hold current levels, then the next significant support comes in around $3,200.

Gold had closed last week under the 50-day simple moving average (SMA) support level of $3,325.

Additionally, sellers breached the 50% Fibonacci Retracement (Fibo) of April’s record rally, settling at $3,297.

“However, with the 14-day Relative Strength Index (RSI) remaining below the 50 level, any recovery attempts are likely to be short-lived,” Mehta said. 

If the selling interest intensifies, the bearish target is seen at $3,168, Mehta added. 

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Ahead of a planned listing of its international unit on the Hong Kong stock exchange, Zijin Mining, a leading Chinese gold and copper miner, has agreed to acquire a project in Kazakhstan for $1.2 billion.

In a significant announcement to the Hong Kong bourse on Monday, the company articulated a strategic vision aimed at dramatically bolstering its position within the global gold mining industry. 

Bolstering gold reserves

This ambitious initiative, centered around a newly disclosed deal, is projected to substantially augment both its gold reserves and its annual production output, South China Morning Post said in a report.

Zijin Mining explicitly stated its intention to ascend from its current sixth-place ranking among the world’s leading gold producers, a position it held last year, to a coveted spot within the top three by the year 2028. 

The upward trajectory is directly attributable to the expected benefits of the recently agreed-upon transaction, which is anticipated to unlock significant new gold resources and operational efficiencies. 

The successful integration of these new assets and capabilities is considered a cornerstone of the company’s long-term growth strategy, positioning it for enhanced market leadership and sustained profitability in the coming years.

Raygorodok project and market impact

Additionally, the company stated that the agreement would “significantly improve Zijin Gold International’s asset scale, profit margins, and global industry standing,” while also facilitating its listing and share offering in the international capital market.

Zijin Mining had announced in May its intention to increase its annual output of gold. The target for 2028 is set at 100 to 110 tonnes, representing a 36-50% increase from 2024 levels.

Furthermore, the company had announced two months ago its intention to reorganise and list its overseas gold mining assets under Zijin Gold International, a company founded in 2007.

This strategic move aims to enhance shareholder value through asset revaluation.

Zijin Gold International, through a firm it owns, has acquired the Raygorodok gold mine project from Kazakhstan-based Cantech for $1.2 billion.

The mine project is based in northern Kazakhstan.

As of the end of last year, the project reported net assets of $291 million, a net profit of $202 million, and revenue of $473 million.

The mine’s initial development plan projected an economic ore reserve of 94.9 million tonnes, based on a gold price of $1,750 per ounce. 

With an average extraction ratio of one gram of gold per tonne of ore, the mine’s facilities could produce approximately 100.6 tonnes of gold.

Gold prices to support expansion

Zijin Mining said:

Under the current gold price environment, there is clear potential to increase resources and reserves and expand production capacity by optimising the pit design at a higher gold price assumption.

Last year, Zijin Mining had produced 73 tonnes of gold. The mine itself produced six tonnes of gold at a cost of $796 per ounce, excluding non-cash expenses such as asset depreciation.

Zijin reported that the London Bullion Market Association’s spot market gold price experienced its most significant annual growth since 2010, surging by 26% throughout 2024.

On Monday, spot gold rebounded to $3,301 per ounce after falling to a one-month low last week. 

This year, gold purchases by global investors, including central banks, have further increased.

This surge is attributed to gold’s role as a safe haven amidst uncertain US trade policies, as reported by State Street Global Advisors on June 5.

Resource Capital Funds, a US private equity firm, owns Cantech, which is 65% owned by V Group International, one of Kazakhstan’s largest equity investment firms. 

Zijin was expected to complete its acquisition of the Kazakhstan project by the end of September.

Gold mines owned by Zijin Mining are located in Australia, Colombia, Ghana, Guyana, Kyrgyzstan, Papua New Guinea, Peru, Serbia, Suriname, and Tajikistan.

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European stock markets started the trading week with modest gains on Monday, with the pan-European Stoxx 600 index edging higher as a newly effective trade deal between the United Kingdom and the United States provided a positive catalyst.

This comes amid a broader trend that saw European equities dramatically outperform their US counterparts during the first half of the year.

In early dealings, the pan-European Stoxx 600 index was up 0.1%, building on gains from the previous week.

Sector performance was mixed, with autos down 0.6% and banks slipping 0.25%, while financial services gained 0.6%.

A key focus for investors is the official start of the trade deal between the UK and the US, which was brokered last month and came into effect this morning.

Key details of the agreement include a reduction in British car export tariffs from 27.5% to 10%, along with the complete elimination of duties on aerospace goods such as engines and aircraft parts.

Companies expected to benefit from this deal were trading slightly higher, having already posted strong gains when the deal was first announced.

These include engine-maker Rolls-Royce, which was up 0.6%, and German automaker BMW, up 0.26%.

However, Aston Martin shares were down a slight 0.1%.

The UK’s FTSE 100 was up 0.1%. It’s worth noting that the UK has still been left with a baseline 10% tariff, and an outlined agreement to put zero tariffs on core steel products has not yet been finalized.

In currency markets, the British pound, which last week hit an almost four-year high against the US dollar, continued its strong run, up 0.1% against the greenback at 7:39 a.m. in London to trade around $1.373.

In economic news, the UK’s statistics agency on Monday confirmed that economic growth for the first quarter of 2025 was 0.7%, in line with its previous estimate.

A transatlantic shift: Europe’s dramatic market comeback

The positive start to the week reinforces a powerful trend seen throughout the first half of 2025: a dramatic outperformance of European markets compared to their US peers.

European stocks outperformed US equities by the biggest margin on record in dollar terms during the first six months of the year, a clear sign that the region’s markets are staging a significant comeback after more than a decade in the doldrums.

This rebound is not confined to stocks.

The euro has surged 13% against the dollar in the six months through June.

Meanwhile, the chaotic rollout of US tariffs has wiped some of the shine off US Treasuries, with German bunds outperforming them since April, even as the German government prepares to issue more debt.

Assets in emerging European markets like Poland and Hungary are also rallying sharply.

This shift is being driven by a reallocation of global capital. Investors are reportedly slowing their purchases of US assets and shifting more money to Europe.

This is happening amidst concerns that President Donald Trump’s program of tariffs and tax cuts will negatively impact US corporate earnings, stoke inflation, and widen the budget deficit.

Europe has become the major beneficiary of this capital rotation, as governments there boost spending while the European Central Bank has been slashing interest rates.

“We’re seeing extremely strong demand for European assets, particularly from the US,” Erik Koenig, who runs the EMEA equity sales desk at Bank of America Corp. in London, told Bloomberg.

While Europe has faced challenges in the past that may have held its markets back, there’s now a growing confidence in its long-term potential.

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