Rate cuts abound; Yuan stabilizes; Disney's miss
Posted August 7, 2019 5:52 a.m. EDT
CNN — 1. Growth fears: The world's central banks keep sending interest rates lower as fears about global economic growth take hold.
The Reserve Bank of New Zealand cut interest rates by 0.5 percentage points on Wednesday. That's more than expected, and puts the official cash rate at a record low of 1.00%. The move sent New Zealand's NZX 50 up 1.9%.
India's central bank also announced a bigger cut than had been anticipated.
The Reserve Bank of India slashed its key lending rate to the lowest level in nine years in a bid to support the country's faltering economy. Shaktikanta Das has now cut rates at each of his four meetings as head of the central bank.
It doesn't end there. The Bank of Thailand also announced a surprise rate cut Wednesday.
And those aren't the only warning signs. German industrial production in June dropped more than 5% compared to the previous year. And Brent crude, the global oil benchmark, is in a bear market, down more than 20% from its recent peak in April.
2. Yuan stabilizes: Currency tensions between the United States and China are easing slightly, though the relationship between the world's two largest economies remains tense.
China on Wednesday fixed the yuan at a new 11-year low. But it's taken steps to shore up its value, which has mollified anxious investors.
Stocks in Asia were mixed in response. The Shanghai Composite fell 0.3% while Hong Kong's Hang Seng gained 0.1%.
Meanwhile, European markets opened higher. Britain's FTSE 100 rose 0.7%, while Germany's DAX gained 1.2% in early trading.
US stocks are also set to trade in the green. The Dow could open up 60 points, or 0.2%. The Nasdaq is tracking up 0.5%, while the S&P 500 is poised to increase 0.3%. US stocks closed sharply higher on Tuesday, paring losses from earlier in the week.
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3. Disney's miss: Investing in streaming is expensive.
Disney said after the bell on Tuesday that its revenue increased 33% during the three months ending in June, bolstered by its direct-to-consumer business that includes Hulu and blockbuster hits such as "Toy Story 4" and "Avengers: Endgame."
But profits fell 51% as the company prepares for the launch of its new streaming service, Disney+, in November. Disney said it will offer a bundle that includes Disney+, ESPN+ and commercial-supported Hulu for $12.99 a month.
Shares fell 3% in premarket trading.
Investors in Match Group are more optimistic. Its stock is up 17% in premarket trading after the company reported an exploding user base for dating app Tinder.
4. Vision Fund scores: SoftBank's massive tech fund is pulling in big profits.
Operating income for the Vision Fund soared 66% to nearly 398 billion yen ($3.8 billion) last quarter thanks to valuation gains on investments like Oyo, Slack and Doordash, the company said in an earnings statement Wednesday.
But operating income for SoftBank as a whole slumped 3.7% from a year earlier to 689 billion yen ($6.5 billion). The drag came in part from steep losses in Sprint, of which SoftBank owns more than 80%, as it prepares for a merger with T-Mobile.
SoftBank founder Masayoshi Son launched the $100 billion Vision Fund in May 2017, with nearly half the money coming from the Saudi government. The Japanese tech company announced last month that it expects to raise $108 billion to form another mega tech fund, the Vision Fund 2.
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5. Coming this week:
Wednesday — US crude oil inventories; SoftBank, CVS, Lyft, Roku and Zillow earningsThursday — China imports and exports; AMC Entertainment, Viacom, CBS, Activision Blizzard, Uber and Yelp earningsFriday — China inflation data; Japan GDP; US Producer Price Index