Key Takeaways
- Spot gold prices surged to $4,262.66 an ounce, marking a significant 4.1% jump as optimism over the reopening of the Strait of Hormuz lowered inflation expectations.
- Markets have pivoted to pricing in only a single U.S. rate increase by year-end, down from two last week, as easing energy pressures reduce the urgency for Federal Reserve tightening.
- Japan's capital flows showed a sharp reversal for the week ending July 31, with domestic investors buying ¥477.9B in foreign bonds while foreign investors offloaded ¥392.5B in Japanese stocks.
- China Banking Corp (CHIBY) reported an 11% increase in H1 2026 profits to 14.5 billion pesos, supported by a 14% rise in net interest income.
- The Ebola outbreak in the Democratic Republic of Congo (DRC) has escalated to 3,973 confirmed cases and 1,801 deaths, intensifying concerns over the fastest-growing outbreak on record.
Precious Metals and Federal Reserve Outlook
Spot gold held its ground at approximately $4,260 an ounce following its largest single-session gain since February. The rally was fueled by reports of progress in negotiations to reopen the Strait of Hormuz, a critical maritime artery for global energy supplies. Investors are increasingly betting that a resolution to the regional conflict will dampen energy-driven inflation, thereby providing the Federal Reserve with more room to pause its aggressive hiking cycle.
Despite the market's dovish shift, Fed Governor Lisa Cook reiterated her stance that she remains prepared to raise interest rates if inflation does not continue to slow toward the 2% target. Silver also saw modest gains, rising 0.1% to $62.14, as the broader precious metals sector benefited from a weakening U.S. dollar and lower Treasury yields.
Japanese Capital Flows and Regional Tensions
Fresh data from Japan for the week ending July 31 reveals a notable shift in international investment patterns. Japanese investors became net buyers of foreign bonds (¥477.9B) after a period of heavy selling, while simultaneously offloading ¥276.4B in foreign stocks. Conversely, foreign investors returned to Japanese bonds with ¥558.9B in net purchases but pulled ¥392.5B out of Japanese equities, suggesting a cautious stance toward the country's stock market amid global volatility.
Geopolitical tensions in the Middle East remain a primary concern for global markets. On Wednesday, Israeli airstrikes reportedly targeted the Burj al-Shemali area in Tyre, southern Lebanon. The continued military activity underscores the fragility of the regional security situation, even as diplomatic efforts regarding the Strait of Hormuz show signs of progress.
Corporate Earnings and Global Health
China Banking Corp (CHIBY) delivered a robust financial performance for the first half of 2026. The bank's net interest margin expanded to 4.67%, driving net interest income up to 39.7 billion pesos. With a Common Equity Tier 1 ratio of 14.7% and a stable non-performing loan (NPL) ratio of 1.5%, the institution remains well-capitalized despite the challenging macroeconomic backdrop.
In the health sector, the Democratic Republic of Congo is battling a severe escalation of the Ebola virus. Confirmed cases have now reached 3,973, with the death toll rising to 1,801. Health officials warn that the current strain, Bundibugyo, is particularly difficult to contain due to the lack of licensed vaccines and the ongoing insecurity in the affected eastern provinces.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.