Key factors for Chinese stocks and gold as markets reopen

As mainland equities start trading again, they may need to play catch-up after a holiday period that saw global bond yields climb, the Federal Reserve lean toward additional rate increases, and new supply risks emerge in the Gulf — all pointing to a cautious session. For Hong Kong, the resumption of southbound Stock Connect flows is a critical variable, since mainland buying has often softened sell-offs and was entirely absent during the break. Gold markets are watching the reopening of Shanghai trading, which brings a major source of physical demand back online; the size of the local premium will indicate whether Golden Week sparked fresh purchases. Sectors tied to energy and interest rates appear most vulnerable, while any signs of strength in holiday consumption data could lift consumer stocks.

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After a week away, mainland investors come back to a world that shifted in their absence: higher yields, a more hawkish Fed, greater danger in the Gulf, and Hong Kong already battered.

• Shanghai and Shenzhen resume trading on Thursday 8 October at 09:30 Beijing time (0130 GMT) after the 1-7 October National Day holiday; Stock Connect flows restart in both directions
• Before the break, the Shanghai Composite ended near 3,840 on 30 September, with a weak reaction to Beijing's latest support package and a sharp decline in tech hardware shares on 28 September
• Hong Kong dropped 2.6% on 2 October, its worst session since March, as it responded to a global bond rout without mainland buyers, then partially recovered
• The Shanghai Gold Exchange also reopens; Golden Week traditionally kicks off China's peak gold-buying season, and the local premium stood at a three-month high just before the holiday
• Citi called early Golden Week consumption data underwhelming; official travel and spending figures are still pending
• Global backdrop: Fed minutes indicate most officials see another rate hike as likely by year end, US consumer inflation expectations rose, and a tanker was hit near Qatar

Mainland Chinese financial markets restart on Thursday following the week-long National Day holiday, and investors are returning to a global environment that changed significantly while they were away. Trading on the Shanghai and Shenzhen stock exchanges resumes at 09:30 Beijing time (0130 GMT, 9.30pm US Eastern on Wednesday), and Stock Connect flows with Hong Kong resume in both directions after being halted since 1 October.

Before the break, mainland stocks were lacklustre. The Shanghai Composite edged up about 0.3% on 30 September to close near 3,840, showing a muted reaction to Beijing's newest support measures. Earlier in the week, on 28 September, technology hardware stocks fell sharply — the ChiNext index lost about 4.5% — after optical transceiver makers were targeted in new US rules aimed at Chinese-made components in AI data centres.

Hong Kong gave mainland investors a taste of what they had missed. The Hang Seng Index tumbled 2.6% on 2 October, its largest one-day decline since March, as it resumed trading after its own National Day break and absorbed a global bond sell-off. Financial stocks led the decline, and disappointment over Chinese stimulus added to the pressure. The index later recovered part of the loss, rising about 1% on 6 October to around 24,300, though volumes remained thin without southbound buying.

Global conditions have also tightened. Minutes from the Federal Reserve's September meeting, released on Wednesday, revealed that most policymakers see another rate increase as likely by year end, while US consumers' one-year inflation expectations climbed to their highest since May 2023. An attack on a tanker north of Qatar has heightened energy supply risks in the Gulf.

Gold will be in focus as the Shanghai Gold Exchange reopens. The World Gold Council has noted that Golden Week traditionally marks the start of China's peak gold-buying season, though high prices and weak consumer confidence dampened jewellery demand earlier this year. The Shanghai premium over London reached its widest in three months just before the holiday. Beijing has also continued to restrict speculation, with authorities reportedly directing major banks to halt leveraged retail gold derivative products ahead of the break.

Consumer spending over the holiday is another area of scrutiny. Citi analysts described early Golden Week data as underwhelming, with spending per traveller likely softer despite steady visitor numbers. Official figures, together with the extent of southbound flows into Hong Kong, will shape market sentiment as the session gets under way.