Financial Daily: U.S.-Iran conflict reignites inflation alarm; U.S. stocks under pressure, gold and crude oil rise together—has the global market entered risk-off mode?

– Hot Topics

– World Bank Chief Economist Gill stated that the conflict between the U.S. and Iran could reignite inflation, push up interest rates, and ultimately drive global economic growth down to as low as 1.3%.

– The 11-day military conflict between the U.S. and Iran has driven oil prices to a near six-week high.

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– Stock Markets

[U.S. Market] Soaring energy prices weighed on the broader market, with the three major U.S. indices closing slightly lower.

On Wednesday, all three major U.S. stock indices closed modestly lower. Although gains in select semiconductor stocks like NVIDIA provided some support, surging oil prices stoked inflation concerns and heightened expectations of rate hikes, capping the rebound in tech shares. The S&P 500 fell 0.14% to close at 7,498.96; the Nasdaq declined 0.57% to 25,690.903; and the Dow Jones Industrial Average dipped 0.01% to 52,218.58. The VIX fear gauge dropped 2.05% to 16.70, trending steadily lower throughout the session, while the Philadelphia Semiconductor Index rose 0.44% to 12,410.665.

The index tracking the U.S. tech 'Magnificent Seven' fell 0.48%, with mixed performance among its components: NVIDIA gained 2.30%, Apple declined 0.56%, Amazon dropped 1.09%, Tesla fell 1.30%, Google A slid 1.46%, Microsoft lost 1.86%, and Meta plunged 2.58%.

The Nasdaq Golden Dragon China Index closed down 1.80% at 6,180.98, ending its recent period of stability. Most prominent Chinese ADRs came under pressure: NetEase tumbled 6.6%, Tencent fell 6%, XPeng and Bilibili each dropped over 3%, Ctrip declined 2.5%, and Alibaba slipped 1.4%. Individually, Circle fell 6.87%, and Taiwan Semiconductor’s ADR declined 0.82%.

[European Market] Major European indices closed higher across the board, led by the UK FTSE.

On Wednesday, major European equity indices closed higher across the board, extending their recent strong trend. At the close, the pan-European STOXX 600 rose 0.58% to 646.93, while the STOXX Europe 50 gained 0.50% to 6,316.99.

Germany's DAX 30 advanced 0.58% to 25,155.41; France's CAC 40 climbed 0.89% to 8,437.89; the UK's FTSE 100 surged 1.24% to 10,716.97, leading regional markets; and Italy's FTSE MIB rose 0.97% to 52,792.04.

[Asian Market] Asian equities were mixed on Wednesday, with Japanese and Korean benchmarks paring early gains.

Asian markets showed mixed performance on Wednesday, as Japanese and Korean indices pared sharp intraday gains, while Singapore continued its upward momentum. The Nikkei 225 ended down 0.18% at 66,115.60; South Korea’s KOSPI initially surged nearly 6% in early trading but gave back most gains, closing up just 0.74% at 6,797.70. Singapore’s Straits Times Index rose steadily throughout the session, gaining 1.24% to close at 5,595.42; Thailand’s SET Index fell 0.82% to 1,639.34.

[Hong Kong Market] Hong Kong stocks opened and traded lower throughout the session, with the Hang Seng Tech Index falling more than 3%.

Hong Kong stocks were under pressure throughout Wednesday, with all three major indices opening lower and continuing to decline. The Hang Seng Tech Index posted a notable loss. At the close, the Hang Seng Index fell 0.95% to 24,892.66 points; the Hang Seng Tech Index dropped 3.04% to 4,668.23 points; and the Hang Seng China Enterprises Index declined 1.31% to 8,251.07 points.

In sector performance, heavyweight tech and internet stocks were broadly lower: Tencent fell 7.05%, NetEase dropped 7.39%, Kuaishou-W declined 5.32%, and Alibaba-W lost 2.91%. AI large-model-related stocks also corrected sharply, with MINIMAX-W plunging over 11%. In contrast, precious metals and resource stocks gained ground amid the broader market weakness. Chifeng Gold surged 15.42%, Lingbao Gold rose 15.13%, Zijin Gold International advanced 9.24%, and Shandong Gold and Zhaojin Gold recorded strong gains across the board, driven by sustained rallies in international gold prices breaking through key psychological levels. In the energy sector, Qiongkuang Energy rose 4.48% and China Coal Energy gained 3.31%, supported by ongoing Middle East tensions and Red Sea shipping risks. Fiber optic and PCB stocks came under significant pressure, with YOFC falling 10.28%, Kingboard Laminates dropping 15.28%, and Kingboard Chemical declining 10.17%.

[A-Share Market] A-share indices diverged, with resource stocks surging while tech stocks pulled back

On Wednesday, the three main A-share indices showed clear divergence: the Shanghai Composite remained narrowly stable, while the ChiNext Index and STAR 50—both of which had rallied strongly the previous session—experienced significant corrections. At the close, the Shanghai Composite rose 0.07% to 3,867.03 points; the Shenzhen Component Index fell 1.42% to 14,061.44 points; and the ChiNext Index dropped 3.23% to 3,566.73 points.

By sector, precious metals and non-ferrous metals surged across the board, becoming the primary driver behind the Shanghai Composite’s resilience. Shanjin International and Shengda Resources both hit their daily trading limits, Chifeng Gold gained over 7%, Zijin Mining rose more than 6%, and Xiaocheng Technology briefly climbed over 11%. The continued strength in international gold prices directly catalyzed the broad rally in resource stocks. In industrial metals, Shengtun Mining jumped over 9%, while Jincheng Xinye and Changyu Group reached their daily upside limits. Coal and power stocks strengthened notably in the afternoon, serving as another key counterbalance to tech-sector losses. Xinjiang New Energy recorded its fifth consecutive daily limit-up, China Huaneng Power achieved four straight limit-ups, and Huadian Liaoning Energy and Huadian Energy posted two limit-ups in three days. Meanwhile, tech stocks faced concentrated profit-taking. Memory chip stocks declined sharply, with Demingli hitting its sixth daily limit-down in eight trading sessions and Jiangbolong falling nearly 8%. PCB-related shares also adjusted downward, with Kingboard Laminates down over 15%, Shengyi Tech losing over 7%, and Wus Printed Circuit Board dropping nearly 7%. Pharmaceutical stocks spiked mid-session, with Bioray Pharma and GemPharmatech rising over 10%, while MedChemExpress, Kelun Pharmaceutical, and Changchun High & New Technology also advanced significantly.

- Bonds

[U.S. Treasuries] Inflation concerns intensify, pushing U.S. Treasury yields higher across the curve

U.S. Treasury markets faced renewed selling pressure on Wednesday, primarily driven by rising inflation concerns sparked by a sharp surge in oil prices to a six-week high. At the New York close, the yield on the 10-year U.S. Treasury note rose 3.45 basis points to 4.6626%; the 2-year yield climbed 4.27 basis points to 4.3042%, briefly touching 4.3084%—its highest level since February 2025; and the 30-year yield increased 2.20 basis points to 5.1532%.

[Non-US Bond Market] Yields on government bonds in major European countries generally rose

Yields on major European sovereign bonds rose across the board, following the upward trend in U.S. Treasury yields, as concerns over energy-driven inflation spread to European markets. Germany’s 10-year Bund yield rose 0.8 basis points to 3.171%, while its 2-year yield climbed 3.9 basis points to 2.842%. The UK’s 10-year gilt yield increased 0.4 basis points to 5.034%, and its 2-year yield rose 3.0 basis points. France’s 10-year OAT yield gained 0.8 basis points, and its 2-year yield rose 3.9 basis points; Italy’s 10-year BTP yield increased 0.7 basis points.

[China Bond Market] Treasury futures closed higher across the board

Treasury futures extended their upward trend on Wednesday, closing higher across all tenors. At the close, the front-month 30-year Treasury futures contract rose 0.62%, the 10-year contract gained 0.14%, the 5-year contract advanced 0.10%, and the 2-year contract increased 0.02%.

– Foreign exchange

[U.S. Dollar] The dollar index edged slightly lower, while the yen’s decline paused temporarily

The dollar index weakened slightly on Wednesday, with the ICE U.S. Dollar Index down 0.04% to 101.130 at the New York close; the Bloomberg Dollar Spot Index fell 0.01% to 1,219.62.

The U.S. dollar was mixed against major global currencies: it declined 0.02% against the Japanese yen to ¥163.14; the euro rose 0.08% against the yen, while the British pound fell 0.05% against the yen.

[Chinese Yuan] The offshore yuan traded at 6.7751 per U.S. dollar.

At the New York close, the U.S. dollar rose by 62 pips against the offshore Chinese yuan from the previous trading day's close, to 6.7751. The onshore yuan weakened by 85 pips against the dollar from the previous session’s overnight closing rate, ending at 6.7750.

[Digital Assets] Cryptocurrency markets diverged, with Ethereum posting modest gains.

Cryptocurrency markets were mixed on Wednesday, with Bitcoin softening while Ethereum recorded gains. Bitcoin slipped approximately 0.32% to $66,188.99; Ethereum rose about 1.31% to $1,947.90; Solana gained 0.95%.

– Products

[Energy] Middle East tensions continue to push oil prices higher.

Driven by persistently rising geopolitical risk premiums and growing market concerns over potential supply disruptions in the Middle East, oil prices strengthened further. At the New York close, U.S. crude futures rose 2.95% to settle at $86.83 per barrel; Brent crude futures climbed 3.36% to settle at $94.07 per barrel.

[Precious Metals] Safe-haven demand pushes gold prices back above the $4,100 per ounce mark.

Precious Metals:Gold prices extended their strong performance, supported by safe-haven demand and a softer U.S. dollar. At the New York close, spot gold rose approximately 1.31% to $4,130.07 per ounce, after hitting an intraday high of $4,166.05; COMEX gold futures gained 1.46% to $4,135.90 per ounce.

Metals Futures Market:In late New York trading, spot silver rose 1.55% to $59.7171 per ounce; US silver futures gained 1.35% to $59.990 per ounce; US copper futures fell 1.00% to $6.4870 per pound. Spot platinum rose 0.90%, and spot palladium increased 1.05%.

[Disclaimer]

The above content is provided by Harbor Family Office (hereinafter referred to as "Harbor Family Office"), summarized from various market information sources. Harbor Family Office and its group members did not participate in preparing the content nor explicitly or implicitly endorse it. This article is for reference only and does not constitute any investment or trading advice. Investment involves risks. Readers should independently assess and judge this material and are advised to seek professional opinions before making any related investments or trades. Without authorization, no one may reproduce, copy, or publish this content in whole or in part to the public in any manner. Copyright belongs to Harbor Family Office and related providers.

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