Geopolitical Jitters Hit Hong Kong: Hang Seng Index Faces Rising Risks Amid Iran’s Hormuz Warning

Market News

We see the Hang Seng Index facing turbulent times as geopolitical tensions rise. Recent U.S. airstrikes on Iran’s nuclear sites triggered a strong reaction, with Iran warning it might block the Strait of Hormuz. This has sent ripples through the stock market, pushing oil prices up and leaving investors on edge.

The Hang Seng Index, a key measure of Hong Kong’s stock market, closed 0.7% higher at 23,689.13 points on Monday, June 23. Yet, it opened 194 points lower at 23,335, showing how fast sentiment can shift. With oil prices climbing and tariff deadlines looming, we expect more uncertainty ahead.

These events matter to anyone watching the stock market. A possible shutdown of the Strait of Hormuz, a vital oil route, could drive prices to US$120 a barrel.

How the Hang Seng Index Reacted

On Monday, June 23, the Hang Seng Index had ups and downs. It ended the day up 0.7% at 23,689.13 points, but started 0.82% lower at 23,335 points. Early trading saw it dip 0.61% to 23,387, as tech and financial stocks struggled.

It rose 1.1% by close, yet fell 55 points, or 1.07%, to 5,077 early on. Big names like Alibaba and Baidu dropped 1.52% and 1.03%, showing the tech sector’s sensitivity to global shocks.

Oil Prices and Stock Market Impacts

  • Oil Price Surge: Brent oil futures increased by 5.7% to HK$81.40 per barrel, and WTI Crude Oil rose 2.01% to $75.035 per barrel.
  • Strait’s Importance: The Strait of Hormuz carries one-third of global oil shipments, representing 20% of the world’s oil supply.
  • Impact on Oil Stocks:
    • CNOOC and PetroChina stocks rose by 1.6%.
    • Sinopec gained 0.7%.
  • Potential Risks:
    • If the Strait is closed, oil prices could soar to US$120 per barrel.
    • Higher oil prices would increase business costs, potentially disrupting global markets.
  • Stock Market Effects:
    • The Hang Seng, particularly energy and trade-dependent sectors, may face significant pressure due to rising costs.
Hang Seng Index
Hang Seng Index

Key Levels to Watch on the Hang Seng Index

We track critical levels for the Hang Seng amid this volatility. Support sits at 23,000 points, with a potential drop to 22,500 if tensions worsen. Resistance stands at 24,000 and 24,439, the latter being the June 11 peak.

RHB Research holds long positions in Hang Seng Index Futures at 21,416 points. They set a stop-loss at 23,000, showing cautious confidence. We advise watching these levels as geopolitical risks unfold.

Tariff Deadlines Add Pressure

Two tariff deadlines loom large for the stock market. On July 9, a 90-day tariff pause ends for US global trading partners. Then, on August 12, the pause with China expires, risking renewed trade friction.

These dates could sway the Hang Seng Index, given Hong Kong’s trade ties. We expect possible shifts in investor confidence as these deadlines near. Businesses and markets may brace for higher costs and supply chain hiccups.

Standout Company Performances

Some companies shine despite the stock market unrest. Semiconductor Manufacturing International rose 4.6% to HK$41.30, a bright spot in tech. Newcomer TransThera Sciences soared 79% to HK$23.50 on its debut.

Bayzed Health Group climbed 42% to HK$6, another strong debut. Pop Mart recovered 1.9% to HK$244.20 after a 12% drop last week. We see these gains as bright spots even though the Hang Seng Index is facing bigger struggles.

What the Numbers Show

Here’s a quick look at key market moves:

  1. Hang Seng Index: Closed at 23,689.13, up 0.7%, but opened 194 points lower.
  2. Oil Prices: Brent hit HK$81.40, up 5.7%; WTI reached $75.035, up 2.01%.
  3. Tech Stocks: Alibaba dropped 1.52%, Baidu fell 1.03%, but the Hang Seng Tech Index rose 1.1% by the end of the day.

Final Thoughts

We’ve seen how Iran’s Hormuz warning shakes the Hang Seng Index and the stock market. Rising oil prices and tariff risks create a tricky landscape for investors. Monitoring key levels and standout companies helps us navigate this storm.

Disclaimer:

This content is made for learning only. It is not meant to give financial advice. Always check the facts yourself. Financial decisions need detailed research.