Market Close Jul 27

Gold shines as investors brace for further US-China tensions

Gold, US Treasuries catch safety bid; China's stocks regional outperformers on industrial profit data; China objects to US entry into consulate premises

Gold shines as investors brace for further US-China tensions
Gold hit an all-time high of US$1,943.93 an ounce today, and helped drag stocks on the Australian share market into positive territory. Photo: AFP.

(ATF) Hong Kong: Panicky investors piled into gold, taking the yellow metal to all time highs amid growing friction between the world’s two largest economies which has soured risk appetite.

China’s Foreign Ministry spokesman said a US entry into the premises of the Chinese Consulate in Houston was an infringement and expressed strong dissatisfaction and firm opposition to it.

“China will make a proper and necessary response in this regard,” he said.

Investors also pared positions as the corporate earnings season rolls on. Facebook, Amazon, Apple and Google are all due to report quarterly earnings this week. The US Federal Reserve’s rate-setting committee also meets on Tuesday, with an announcement due on Wednesday.

Gold prices rose 2.1% to $1,941 an ounce and US Treasuries rallied with the 10-year yield dropping 2 basis points to 0.58%.

“Ever decreasing interest rates and record-setting gold prices, however, reveal considerable nervousness about the outlook. The flight into gold, US treasuries, CHF, and JPY is cautioning against complacency regarding a market correction this summer,” DBS chief economist Taimur Baig said in a note.

Japan’s Nikkei 225 index dipped 0.16% and Hong Kong’s HSI index dropped 0.41%.

But Australia’s S&P ASX 200 benchmark added 0.34%, helped by a rally in gold mining stocks after the price of the precious metal reached an all-time high of US$1,943.93 per ounce.

And China’s mainland CSI 300 index climbed 0.51% after economic data showed that recovery in China’s industrial firms’ profits quickened in June.

Asian credit markets traded flat with the Asia IG index at 74/75 basis points and sovereign credit spreads ranging between marginally tighter to 1-2 basis points wider.

But primary markets were busy as issuers tapped yield-hungry investors' appetite for credit. DaFa PropertiesChong Hing BankKorea South-East PowerChina Everbright BankCSC Financial are in the market with new bond offerings.

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Asia Stocks

# Japan’s Nikkei 225 dipped 0.16%

# Australia’s S&P ASX 200 added 0.34% 

# Hong Kong’s Hang Seng index fell 0.41%

# China’s CSI300 advanced 0.51%

# The MSCI Asia Pacific index climbed 0.59%.

Stock of the day 

Shandong Gold Mining Co rose as much as 12.9% after the price of gold struck a record high of US$1,943.93 per ounce. Earlier this month the company said its profit would grow 80%-110% in the first half on the back of the gold rally.