Financial Daily: Escalation of Middle East conflict leads to the closure of the Strait of Hormuz! US stocks reverse in a V-shape, oil, gas, and gold rise, while European and Asian stock markets plummet across the board.

- Focus

– The Iran conflict further escalates, with fighting spreading to Lebanon.

– The US Central Command stated that Kuwait mistakenly shot down three American fighter jets

– Iranian media reported that the Strait of Hormuz has been closed, and Iran will fire on any vessels attempting to pass through

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- Stock Market

[US Market] The three major US stock indexes ended mixed with a V-shaped movement, closing nearly flat compared to the previous trading day

On Monday, the escalating situation in the Middle East ignited investors' risk-aversion sentiment. However, news of the closure of the Strait of Hormuz and the shutdown of Saudi Arabia's largest refinery following a drone attack significantly increased concerns over potential inflation driven by a surge in oil prices. After an initial sell-off, US stocks rebounded with a V-shaped recovery, and the three major indexes ended nearly flat compared to the previous trading day.

At the close, the S&P 500 Index rose 0.04% to 6,881.62 points; the Nasdaq Composite Index rose 0.36% to 22,748.857 points; the Dow Jones Industrial Average fell 0.15% to 48,904.78 points. The VIX Volatility Index rose 7.96% to 21.44. Technology stocks, software stocks, energy stocks, and defense stocks performed strongly, while consumer and airline stocks led declines.

The index of the seven major US tech giants rose 0.56%, with NVIDIA up 2.93%, Microsoft up 1.48%, Amazon down 0.77%, and Google A down 1.68%. The Nasdaq Golden Dragon China Index fell 1.08% to 7,198.52 points. Among popular Chinese stocks, Kingsoft Cloud dropped nearly 5%, and Xiaomi fell 4.1%. In individual performances, Circle surged over 15%.

[European Market] On Monday, major European country indices generally plummeted, with the pan-European index posting its worst single-day performance in nearly three months

On Monday, major European country indices generally plummeted, with the pan-European index posting its worst single-day performance in nearly three months. At the close, the pan-European STOXX 600 Index fell 1.65% to 623.36 points. The pan-European STOXX 50 Index dropped 2.47% to 5,987.02 points; among its components, BMW fell nearly 5%, Volkswagen and LVMH Group both dropped more than 4%.

The German DAX 30 Index fell 2.42% to 24,672.40 points; the French CAC 40 Index dropped 2.17% to 8,394.32 points; and the UK FTSE 100 Index declined 1.20% to 10,780.11 points.

[Asian Market] On Monday, Japan and South Korea’s stock markets both fell

On Monday, the Japanese and Korean stock markets were collectively hit by the situation in the Middle East, with all three major indexes falling over 1%. By the close, the Nikkei 225 Index had dropped 1.35% to 58,057.24 points, the TOPIX Index fell 1.02% to 3,898.42 points, and the KOSPI Index slid 1.00% to 6,244.13 points.

[Hong Kong Market] All three major Hong Kong stock indexes closed lower, with the Hang Seng Tech Index dropping below 5,000 points

Hong Kong stocks opened lower and continued to decline on Monday, affected by escalating geopolitical conflicts in the Middle East. All three major indexes ended lower, with the Hang Seng Tech Index falling below 5,000 points. By the close, the Hang Seng Index was down 2.14% at 26,059.85 points, the Hang Seng Tech Index fell 2.89% to 4,989.37 points, and the Hang Seng China Enterprises Index dropped 1.78% to 8,701.91 points. Sector-wise, tech stocks generally declined, with SenseTime plunging over 9%, Alibaba and Meituan both falling over 4.5%, and Baidu Group closing down 4.2%. Concerns over oil supply caused energy shares to soar, with Shandong Molong jumping nearly 116%, Baqin Oil Services surging over 105%, and Yanchang Petroleum International spiking 49.4%. Precious metal stocks broadly rose, with Chifeng Gold closing up 12.15%.

[A-share Market] A-shares showed volatile performance, with mixed results for the three major indexes

The A-share market experienced volatility throughout Monday. In the afternoon, the three major indexes reversed losses into gains but retreated towards the close, resulting in mixed performance, with only the Shanghai Composite Index ending higher. By the close, the Shanghai Composite Index gained 0.47%.%It closed at 4,182.59 points; the Shenzhen Component Index fell 0.20% to 14,465.79 points, and the ChiNext Index dropped 0.49% to 3,294.16 points. Sector-wise, rising geopolitical tensions in the Middle East, including the death of Iran's Supreme Leader Khamenei and Iran's closure of the Strait of Hormuz, led to a surge in the oil and gas sector, with over a dozen stocks such as PetroChina, CNOOC, and Sinopec hitting their daily limit. The precious metals sector also surged due to risk aversion, with several stocks like Sichuan Gold, Hunan Silver, and Western Gold reaching their upper trading limits. The shipping sector performed strongly, with COSCO Shipping Far Sea jumping nearly 30%, and Huaguang Source Sea surging over 15%. Technology sectors like AI applications, fintech, and humanoid robotics saw declines.

– Bonds

[US Bonds] US Treasury yields soared, with the 10-year yield rising over 10 basis points

US Treasury yields surged. In late New York trading, the 10-year Treasury yield climbed 10.85 basis points to 4.0460%, while the two-year Treasury yield rose 10.43 basis points to 3.4793%.

[Non-US Bond Markets] 10-year European government bond yields rebounded broadly

On Monday, 10-year European government bond yields rebounded broadly. By the European session close, Germany’s 10-year bond yield increased by 6.9 basis points to 2.712%, the UK’s 10-year yield rose 14.1 basis points to 4.374%, and France’s 10-year yield climbed 7.6 basis points to 3.294%.

[China Bond Market] On Monday, all government bond futures rose.

On Monday, government bond futures rose across the board. At the close, the 30-year main contract was up 0.55%, the 10-year main contract increased by 0.13%, the 5-year main contract gained 0.09%, and the 2-year main contract climbed 0.02%.

– Foreign exchange

[US Dollar] The US Dollar Index rose, with the ICE US Dollar Index gaining 0.80%.

The US Dollar Index rose due to market risk aversion, once surging over 1%. In late New York trading, the ICE US Dollar Index was up 0.80% at 98.390 points; the Bloomberg US Dollar Index rose 0.78% to 1,196.77 points.

[Non-US Currencies] The US dollar broadly appreciated against most major currencies, with the Japanese yen falling nearly 0.9%.

The US dollar broadly appreciated against the world's major currencies, with the Japanese yen falling nearly 0.9%. The US dollar rose 0.89% against the yen to 157.44 yen. The euro fell 0.85% against the dollar to 1.1712 dollars.

[Chinese Yuan] The US dollar against offshore Chinese yuan settled at 6.9010 yuan.

In late New York trading, the US dollar against offshore Chinese yuan rose 385 points from the previous trading day’s close, settling at 6.9010 yuan. Onshore Chinese yuan fell 296 points against the US dollar from the previous trading day’s closing price, ending at 6.8855 yuan.

[Cryptocurrency] The cryptocurrency market rebounded again, with Bitcoin rising about 2%.

On Monday, the cryptocurrency market rebounded strongly again, with Bitcoin’s price rising about 6%, briefly reaching the $70,000 mark before retreating below $69,000; Ethereum's price also climbed approximately 6%.

– Product

[Energy] Crude oil futures prices surged significantly before pulling back slightly.

Crude oil futures prices surged significantly during the session due to escalating tensions in the Middle East, followed by a slight pullback. By the close of US stocks, Brent crude futures had risen 6.68%, settling at $77.74 per barrel, while US crude futures were up 6.28%, settling at $71.23 per barrel.

[Precious Metals] Precious metals, except for gold, generally fell, with spot gold prices rising by 0.97%.

Precious Metals:Gold prices retreated after an earlier surge; by the New York close, spot gold was up 0.97%, trading at $5,330.12 per ounce, while US gold futures rose 1.81% to settle at $5,342.80 per ounce.

Metals Futures Market:Precious metals, excluding gold, mostly declined; by the New York close, spot silver fell approximately 4.7%, trading at $89.3665 per ounce, while US silver futures dropped about 3.8% to $89.765 per ounce. US copper futures fell about 1.6%, trading at $5.9640 per pound; spot platinum dropped over 2.5%, and spot palladium fell more than 0.4%.

[Disclaimer]

The content above is provided by Harbor Family Office (hereinafter referred to as "Harbor Family Office"), sourced from market information gathered from various channels. Neither Harbor Family Office nor its group members participated in preparing the content, nor did they explicitly or implicitly endorse or approve it. This article is for reference only and does not constitute any investment or trading advice. Investment involves risks. Readers should independently evaluate and judge this information and are advised to consult professionals before making any investment or trading decisions. Without authorization, no one may reproduce, copy, or publish the content in whole or in part to the public in any manner. Copyright belongs to Harbor Family Office and relevant providers.

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