Hang Seng Index News: Risks Rise as Iran Threatens Strait of Hormuz Closure

Markets Slump as Iran Eyes Strait of Hormuz Closure

The Iran-Israel conflict entered a new phase over the weekend as the US bombed three key nuclear sites in Iran. The surprise attack and the threat of a broader Middle East conflict weighed on demand for risk assets. Concerns about Iran closing the Strait of Hormuz drove WTI Crude Oil prices higher in early trading on Monday, June 23, adding to the market angst.

On June 23, the Hang Seng Index reversed Friday’s gains in early trading as EV and tech stocks dropped.

The Israel-Iran conflict, trade headlines, and stimulus plans remain key drivers. These factors will likely determine if the Hang Seng Index drops below 23,000 or revisits 24,000.

Hang Seng Index Slides as Oil Prices Climb

US equity markets had a mixed Friday, June 20 session, with the Nasdaq Composite Index and S&P 500 dropping 0.51% and 0.22%, respectively, while the Dow rose 0.08%. Meanwhile, the Hang Seng Index fell 0.61% to 23,387 in early trading, tracking US futures lower. Mainland China’s markets also came under selling pressure, with the CSI 300 and Shanghai Composite Index down 0.49% and 0.31%, respectively.

EV and Tech Stocks Hit the Reverse

Fears of an Iran retaliation against the US bombing fueled concerns over the global economic outlook. Weaker consumer sentiment and consumption concerns impacted EV and tech stocks.

Tech heavyweights Alibaba (09988) and Baidu (09888) slid 1.52% and 1.03%, respectively, dragging the Hang Seng Tech Index down 0.78%.

EV stocks mirrored the broader market trends, with BYD (01211) and Li Auto (02015) declining 1.11% and 0.29%, respectively.

Middle East Conflict: Will Iran Close the Strait of Hormuz

On Sunday, June 22, Iran responded to the three US military strikes on strategic nuclear sites, firing missiles at Israel. Iran’s parliament also approved closing the Strait of Hormuz. The Supreme National Security Council must consider the approval and decide whether to close the Strait for the first time since 1972.

Closure would disrupt supply, driving crude oil prices higher. Rising oil prices may fuel inflationary pressures, impacting central bank policy paths, borrowing costs, and the global economy. However, hopes of Iran leaving the Strait of Hormuz open limited the escalation’s impact on global markets.

20% of the world’s oil supply passes through the Strait, of which 50% is destined for China, a key Iranian ally. Economists speculated that disrupting supply to China would not be in Iran’s best interest.

WTI Crude Oil prices climbed 2.01% to $75.035 in early trading on June 23.

Technical Setup: 23,000 Support in Focus as Geopolitical Risks Surge

On June 23, the Hang Seng Index traded below its June highs, hovering around the May-early June congestion zone. Significantly, the index remained above the 50-day Exponential Moving Average (EMA), signaling a bullish bias. Despite the morning losses, oil and FX market movements signaled a short conflict, cushioning the downside for global equity markets.

An Iran-Israel ceasefire could allow progress toward a US-Iran nuclear deal, potentially driving the index back to 24,000. A sustained move above 24,000 could bring the June 11 high of 24,439 into play. Conversely, the Hang Seng Index could slide toward 23,000 if Iran closes the Strait of Hormuz, potentially exposing 22,500.

Hang Seng Technical Outlook

• Resistance: 24,000, and then 24,439.
• Support: 50-day EMA at 23,238, 23,000, then 22,500.
• Short-term Bias: Bullish but contingent on Middle East headlines, trade news, and stimulus-related updates.

Outlook: Strait of Hormuz Closure or Rebound to 24,000?

The Hang Seng Index traded within its recent congestion range on June 23. However, the closure of the Strait of Hormuz may significantly weigh on risk sentiment, bringing sub-23,000 into view. On the other hand, progress toward a US-Iran nuclear deal would lift sentiment. In the meantime, resistance at 23,500 may limit the upside without positive developments.

What’s next for the Hang Seng? Stay informed with real-time updates as geopolitical risks and US-China developments drive sentiment. Follow our live coverage and consult our economic calendar.