Floor Report | Monitoring US-Iran Conflict Developments, Market Adopts Cautious Stance

The US-Iran war shows no signs of stopping, with oil tankers and cargo ships in the Persian Gulf being attacked one after another. Iran’s new Supreme Leader, Mojtaba Khamenei, has vowed to continue blocking the Strait of Hormuz. If the war persists, new frontlines will open, pushing oil prices higher. NYMEX crude oil futures have returned above $90 per barrel, putting significant pressure on US stocks on Thursday. In fact, persistent high oil prices pose a stagflation risk, which is very unfavorable for the real economy and the stock market, especially for capital-intensive sectors and tech companies still burning cash. As a result, the Nasdaq performed the worst last night.

The Dow opened down 174 points, then the decline widened to as much as 755 points, hitting a low of 46,662. It closed at 46,667, near the day’s low, down 739 points or 1.56%. The S&P 500 once dropped 1.56%, closing down 103 points or 1.52% at 6,672. The tech-heavy Nasdaq plunged 1.87% at one point, closing down 404 points or 1.78% at 22,311. The so-called “fear gauge” VIX volatility index surged 12.3%, reaching 27.22. Although this morning during Asian hours, Dow and Nasdaq futures rebounded, the gains had already significantly narrowed by midday. With high oil prices, the rebound momentum remains limited. Yesterday, Man also mentioned that US stock portfolios are currently not adding more positions, focusing instead on defensive levels. Holding support levels is already good. As for tonight, the NQ’s key level has shifted down to 24,600, with support at 24,500/24,400, and resistance at 24,800/24,900/25,000. If NQ cannot regain 25,000 and stabilize, each rebound will be weaker than the last, making the market quite sluggish.

Regarding the Dow’s sharp decline last night, it was mainly due to Morgan Stanley and Cliffwater restricting redemptions from their private equity funds, triggering large banks and alternative asset managers to sell off. Morgan Stanley closed down 4.1%, Goldman Sachs fell 4.4%, the largest declines among Dow components. Fund redemption restrictions are a significant issue, as investors worry about liquidity problems in related funds, which can impact market confidence.

The ongoing US-Iran war has pushed oil prices higher again. Mainland China’s two sessions have concluded, with the central government adopting a relatively conservative policy stance. Not only are large-scale stimulus measures lacking, but reports indicate restrictions on banks and state-owned enterprises using OpenClaw, which has kept tech stocks weak. Hong Kong stocks rebounded weakly after opening lower yesterday, struggling to break above 26,000 and repeatedly falling back. The Hang Seng Index fell 182 points to close at 25,716, with a turnover of only HKD 24.21 billion, reflecting cautious investor sentiment amid volatile markets. During night trading, US three major indices fell over 1%, with futures and ADRs declining. Night futures broke below 25,500, and this morning, Hang Seng futures hovered around 25,400. The Hang Seng Index opened 133 points lower this morning, with an early drop of 241 points to a low of 25,475, nearly filling the upward gap from Tuesday. Before fully filling the gap, it rebounded, narrowing the half-day decline to 123 points or 0.48%, at 25,593. The China Enterprises Index fell 1 point or 0.01% to 8,698; the Tech Index dropped 20 points or 0.41% to 5,007. Half-day turnover was about HKD 12.6 billion, with trading quieting down before the weekend, with buyers and sellers on the sidelines.

This morning, financial stocks performed particularly poorly. Even the previously strong Tencent (00700) fell 3.8% in half a day, dragging Hong Kong stocks down for the third consecutive trading day. However, Hong Kong stocks surprisingly did not take advantage of the upward gap from Tuesday (25,442–25,611) or the futures (25,351–25,535), thanks to tech stocks like Tencent rising against the trend and supporting the market. Currently, NYMEX crude remains above $90, which is unfavorable for stocks. Although G7 earlier stated that strategic petroleum reserves could be used if necessary, it has not stopped the oil price from rising. Global markets are expected to remain volatile in the short term due to the US-Iran conflict, including Hong Kong stocks. Today, if the Hang Seng Index manages to fill the Tuesday upward gap and stabilize above 25,700–25,750, supported by the 5-day and 10-day moving averages, it could stabilize and even complete a correction. Conversely, if the entire upward gap is filled and the 25,400 bottom is lost, there is a high chance of testing the 250-day moving average at 25,000 again. For now, Hong Kong stocks may fluctuate within the 25,000 to 26,300 range until a clear breakout occurs—either breaking below the 250-day moving average or rebounding and stabilizing above the 20-day moving average.

Maidwen

(Xu Diyi, licensed by the SFC)