Gold Shines as Stocks Sink
Asian equity futures are pointing to a rough opening after U.S. stocks declined on mixed corporate earnings and lingering trade tension. Treasuries rose, with 10-year yields down more than four basis points. The dollar dropped against most of its G-10 counterparts, with the kiwi and loonie leading the way. Gold jumped more than 1%, helped by comments from Dalio, who said adding the metal to one’s portfolio “would be both risk-reducing and return-enhancing.”
Betting Big on Hong Kong
After beating 98% of his rivals in China with 46% return in one equity fund, investor Qu Yang is shifting his money into Hong Kong. The money manager at Qianhai Kaiyuan Fund Management Co. has boosted the proportion of Hong Kong shares in one of his winning funds to more than 30% over the past three months, according to the fund’s latest fact sheet. “Hong Kong stocks have a better chance than A shares of outperforming in the second half,” Qu said. He argues a likely rate cut by the U.S. Federal Reserve should draw more foreign investors to equities in the city, where valuations remain below historical averages.
Central Banks in Focus
Two Asian central bank decisions will provide the day’s suspense. Analysts are divided on whether the Bank of Korea and Bank Indonesia will cut their benchmark rates by 25 basis points at meetings Thursday. Bloomberg Economics is in the hold camp for both, expecting policy makers in Seoul to wait to ease until after any Fed action, and those in Jakarta to be constrained by concerns about capital outflows.
Iran’s Hormuz Threat
The U.S. “shot itself in the foot” by abandoning the Iran nuclear accord, Foreign Minister Mohammad Javad Zarif told Bloomberg, offering little hope for restarting talks under President Trump. He criticized European countries for not carrying out their obligations under the deal, and reiterated that Tehran won’t pursue atomic weapons. He also said Iran could shut the Strait of Hormuz but doesn’t want to.
Netflix served up a twist, losing customers in the U.S. and signing up only 2.7 million globally in the second quarter, well shy of the 5 million it had forecast. Blame a recent price increase and a weak slate of original programming. Things should pick up in the second half with a heavy release schedule, and the company expects 7 million new users this quarter. Still, shares fell more than 11% in late trading.