Asian stocks rose on Monday as investors turned their attention to domestic news after the escalation of the conflict between Israel and Iran over the weekend.
The Japanese market’s popularity has picked up, and the unexpectedly positive data from the Chinese mainland has been enough to stimulate tentative buying in the region’s stock markets after a mixed opening. The Nikkei 225 index in Japan rose by 1%, and the Hang Seng China Enterprises Index reversed its early losses. U.S. stock futures also rose, and the U.S. dollar index strengthened.
Li Haomin, senior macro strategist at Lombard Odier Bank Singapore Ltd., said, “It’s too early to tell whether the Asian market can fully see through this rapidly evolving conflict, which remains crucial to the region’s energy security. The muted response from all sides may reflect some relief that the air strikes by both sides have been relatively targeted.”
On Friday, the stock market plunged in response to reports that Israel had launched an air strike on Iran. A major concern is that this conflict could lead to a long-term disruption in oil supplies. This could put pressure on the global economy and potentially trigger a new round of inflation at a time when many central banks are turning to loose policies. Brent crude futures rose by as much as 5.5% in early trading but later gave up most of those gains.
Yields on most major maturities of US Treasuries rose. The yield on the 10-year Treasury note climbed 2 basis points to 4.42%.
Japan’s stock market was buoyed by both the depreciation of the yen (which could boost companies with overseas earnings) and the rise in defense company stocks. This came after reports that Japan and the European Union would hold talks to discuss defense industry cooperation measures. The yen fell about 0.2% against the US dollar.
China’s retail sales rose 6.4% in May, far exceeding expectations of 4.9%. Meanwhile, a series of data released by China also reflected a mixed economic picture. But this unexpected figure lifted market sentiment and pushed the Hong Kong stock market higher after a previous decline.
However, as the conflict escalates, investors brace for a busy week of central bank meetings, with few market observers believing that the volatility has come to an end. The Federal Reserve, the Bank of Japan, and many other monetary authorities will announce their interest rate decisions this week.
“The market should prepare for long-term uncertainties,” said Wolf von Rotberg, equity strategist at Bank J. Safra Sarasin. “Hedging against potential disruptions in the oil supply chain by investing in the energy market and increasing holdings of gold (whose structural upward trend may accelerate) is the best way to protect investment portfolios from further escalation of the situation in the Middle East.”
Technical analysis:
Gold: Last Friday, we provided two yellow low-sweep liquidity levels in our plugin for catching a rebound. As can be seen, the price approached the 3400 mark and formed a pinbar. Over the weekend, Iran’s counterattack had limited effect, and the price opened higher on Monday but not by much. Currently, it has started to consolidate and oscillate. For today, maintain the momentum trading for a breakout above the range; also keep an eye out for the rebound signals after low-sweeping at 3400 and 3380. For detailed positions, please consult the plugin.
The plugin is updated from 12:00 to 13:00 every trading day. If you want to experience the same plugin as shown in the picture, please contact V: Hana-fgfg and note “666” in the message.
The Nasdaq: The price has recently experienced consecutive pullbacks after upward liquidity sweeps over the past few trading days. Our plugin has continuously captured multiple yellow block opportunities over the past week. We will continue to monitor the pullback signals after upward liquidity sweeps intraday. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
The plugin is updated from 12:00 to 13:00 every trading day. If you want to experience the same plugin as shown in the chart, please contact V: Hana-fgfg and note “666” in the message.
Crude oil: The yellow block we alerted in the plugin last Friday performed perfectly again. After the price dropped to 71.19, it quickly rebounded above 71.99 and then generated a profit-to-loss ratio of more than 5 times. For today’s trading, we need to pay more attention to the momentum signal of the convergence breakout. For detailed positions, please consult the plugin.
(Crude Oil 15-Minute Chart)
The plugin is updated from 12:00 to 13:00 every trading day. If you want to experience the same plugin as shown in the picture, please contact V: Hana-fgfg and note “666” in the message.
Today’s key economic data and events to focus on:
15:00 ECB Governing Council member Nagel delivers a speech
The Eurozone Financial Summit will be held at 18:30, and the governor of the German Central Bank, Nagel, will deliver a speech.
20:30 US June New York Fed Manufacturing PMI
21:00 Canada Existing Home Sales (MoM) for May
