Financial Daily: Significant escalation in the Middle East geopolitical situation triggered global market turbulence! US stocks made a dramatic V-shaped recovery, but why did gold plummet over 4%?

- Focus

– Trump stated he has instructed US Treasury Secretary Bethsant to cut off trade relations between the US and Spain.

– Trump stated that he would provide insurance for energy transportation in the Gulf region and, if necessary, dispatch naval escorts.

– International Monetary Fund: The economic impact of the Middle East war depends on its duration, level of destruction, and energy costs.

– European Central Bank officials said that given the unclear impact of the Iran war, the ECB should delay interest rate adjustments.

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- Stock Market

[US Market] All three major US stock indices closed lower, with a V-shaped trend narrowing losses.

On Tuesday, Trump stated that he would “spare no expense” on the Iran issue. The situation in the Middle East weighed heavily on the opening of the US stock market, causing the VIX panic index to soar. Subsequently, Trump announced that he had ordered the US Development Finance Corporation to provide political risk insurance and financial security guarantees for maritime trade passing through the Gulf region, especially energy transportation. If necessary, the US Navy will escort oil tankers through the Strait of Hormuz. Following these remarks, the stock market rebounded from its lows, the VIX panic index retreated, and all three major US stock indexes closed lower.

At the close, the S&P 500 Index fell 0.94% to 6,816.63 points; the Nasdaq Index dropped 1.02% to 22,516.691 points; and the Dow Jones Industrial Average declined 0.83% to 48,501.27 points. The VIX panic index rose 9.93% to 23.57. Leading the declines were the chip sector, AI, robotics sector, and the US solar photovoltaic sector.

The US tech seven giants index fell 0.51%, with Microsoft rising 1.35%, Google A falling nearly 1%, NVIDIA dropping 1.33%, and Tesla declining 2.70%. The Nasdaq Golden Dragon China Index fell 3.34% to 6,958.04 points. Among popular Chinese stocks, Kingsoft Cloud plummeted 8.3%, JinkoSolar fell about 8%, Xiaomi Group declined 5.2%, and Alibaba dropped 4.9%. On an individual stock basis, Circle rose 3.6%.

[European Market] European major country indices continued their declines on Tuesday, with the pan-European index and several national indices falling more than 3%.

On Tuesday, European major country indices extended their sharp declines, with the pan-European index and multiple national indices falling over 3%. At the close, the pan-European STOXX 600 Index fell 3.08% to 604.44 points. The pan-European STOXX 50 Index dropped 3.59% to 5,771.73 points.

The German DAX 30 Index fell 3.44% to 23,790.65 points; the French CAC 40 Index declined 3.46% to 8,103.84 points; and the UK FTSE 100 Index dropped 2.75% to 10,484.13 points.

[Asian Markets] On Tuesday, stock markets in Japan and South Korea plummeted, with the South Korean index falling over 7%.

On Tuesday, stock markets in Japan and South Korea plunged due to the situation in the Middle East, with the South Korean index dropping more than 7%. By the close, the Nikkei 225 fell 3.06% to 56,279.05 points; the Tokyo Stock Price Index (TOPIX) dropped 3.24% to 3,772.17 points. The KOSPI index in South Korea fell 7.24% to 5,791.91 points.

[Hong Kong Market] Hong Kong stocks closed lower across all three major indices.

On Tuesday, Hong Kong stocks extended their downturn, with all three major indices closing lower. By the close, the Hang Seng Index fell 1.12% to 25,768.08 points; the Hang Seng Tech Index dropped 2.26% to 4,876.53 points; and the Hang Seng China Enterprises Index fell 1.07% to 8,608.71 points. Sector-wise, the tech index once fell more than 2.5%, with Leapmotor closing down 7%, Huahong Semiconductor and XPeng Motors both falling over 5%, Xiaomi Group closing down 4.71%, and Alibaba closing down 1.17%. Oil stocks strengthened due to the situation in the Middle East, with PetroChina rising over 5%, and CNOOC up more than 3%.

[A-Share Market] A-shares opened higher but closed lower, with the three major indexes all ending in negative territory

Chinese mainland stocks opened higher but closed lower on Tuesday, with all three major indices posting losses, and the Shenzhen Component Index falling over 3%. By the close, the Shanghai Composite Index fell 1.43% to 4,122.68 points; the Shenzhen Component Index dropped 3.07% to 14,022.39 points; and the ChiNext Index fell 2.57% to 3,209.48 points. Sector-wise, geopolitical tensions in the Middle East escalated again, leading to another surge in the oil and gas sector, with companies like PetroChina, CNOOC, and Sinopec among a dozen oil and gas stocks hitting the upper limit. Shipping stocks continued their strong performance, with COSCO Shipping Resources surging nearly 30% for the second consecutive day. The semiconductor industry chain weakened.

– Bonds

[US Bonds] US bond yields continued to rise.

US bond yields continued to rise. In late New York trading, the yield on the 10-year US Treasury note increased by 2.30 basis points to 4.0575%; while the yield on the two-year US Treasury note rose by 3.29 basis points to 3.4999%.

[Non-US Bond Markets] Yields on 10-year European government bonds generally rose.

On Tuesday, yields on 10-year European government bonds generally rose. In late European trading, the yield on Germany's 10-year government bond increased by 4.0 basis points to 2.752%; the yield on the UK's 10-year government bond rose by 9.7 basis points to 4.471%; and the yield on France’s 10-year government bond climbed by 11.3 basis points to 3.403%.

[China Bond Market] Government bond futures showed mixed performance on Tuesday.

Mixed performance in treasury futures on Tuesday. By the close, the 30-year main contract rose by 0.09%, the 10-year main contract fell by 0.01%, the 5-year main contract remained flat compared to the previous trading day, and the 2-year main contract increased by 0.01%.

– Foreign exchange

[US Dollar] The US dollar index surged then pulled back, with the ICE US dollar index rising by 0.68%.

The US dollar index surged then retreated. In late New York trading, the ICE US dollar index rose by 0.68% to 999.053 points; the Bloomberg US dollar index climbed by 0.54% to 1,202.61 points.

[Non-US Currencies] The US dollar generally strengthened against most major currencies.

The US dollar broadly strengthened against the world's major currencies. In late New York trading, the US dollar rose 0.08% against the Japanese yen to 157.52 yen. The euro fell approximately 0.6% against the US dollar to 1.1616 dollars, while the British pound dropped about 0.3% against the US dollar to 1.3361 dollars.

[Renminbi] The US dollar against offshore renminbi was at 6.9194 yuan.

In late New York trading, the US dollar against offshore renminbi increased by 184 points compared to the previous trading day’s close, reaching 6.9194 yuan. The onshore renminbi against the US dollar fell by 142 points from the previous trading day’s closing price, settling at 6.8997 yuan.

[Cryptocurrency] Cryptocurrency markets declined, with Bitcoin falling by approximately 1.2%.

Cryptocurrency markets fell on Tuesday, with the price of Bitcoin dropping by approximately 1.2% to below $68,500; Ethereum prices fell by about 2.6%, trading at $1,987.91.

– Product

[Energy] Crude oil futures surged initially but trimmed gains later.

Crude oil futures surged but retreated during the session after Trump stated that he would provide insurance and escorts for oil tankers. At the close of U.S. stocks, Brent crude futures rose 4.71%, settling at $81.40 per barrel; U.S. crude futures climbed 4.67%, settling at $74.56 per barrel.

[Precious Metals] Precious metals saw widespread sharp declines, with spot gold prices falling more than 4%.

Precious Metals:Gold prices fell more than 4%. In late New York trading, spot gold dropped 4.41%, to $5,087.77 per ounce; U.S. gold futures declined 3.98%, to $5,099.40 per ounce.

Metals Futures Market:Precious metals saw widespread sharp declines. In late New York trading, spot silver fell approximately 8.2%, to $82.0572 per ounce; U.S. silver futures dropped around 7.2%, to $82.470 per ounce. U.S. copper futures declined 2.2%, to $5.8335 per pound; spot platinum fell over 9%, and spot palladium dropped over 7%.

[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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