Asia mid-session: Oil extends gains, Asian equities recovered, and Gold retreated

[Redator]

Tensions between Israel and Iran entered a fourth consecutive day on Monday, with no signs of de-escalation. The conflict has intensified fears of a broader regional crisis in the oil-rich Middle East, particularly concerns over potential disruptions to oil supply through the Strait of Hormuz.

Rising geopolitical risk premium and oil prices

WTI crude oil extended its rally by 0.7% in today’s Asian session, building on Friday’s sharp gains that brought it to US$73.08 per barrel—its highest level in nearly six months, marking a weekly gain of 12.4%.

Further stoking market anxiety, US President Trump warned on Sunday that the US could become involved in the Israel-Iran conflict, elevating geopolitical risk. This has likely increased the risk premium, with potential knock-on effects for risk assets such as equities.

Better-than-expected China data led to a recovery in HK & Japanese equities

Despite the heightened geopolitical tensions, Asian stock markets showed resilience today, buoyed by stronger-than-expected economic data from China that suggested early signs of recovery from persistent deflationary pressures.

China’s House Price Index saw a slower annual decline in May, easing to -3.5% from April’s -4%, while retail sales rose 6.4% y/y, exceeding expectations of 5.9% and improving from April’s 5.1%. In response, the Hang Seng China Enterprises Index edged up 0.2%, the Hang Seng Index was flat, and Japan’s Nikkei 225 gained 1.2%.

US dollar strength remained below resistance while Gold saw profit-taking

Meanwhile, the strength of the US dollar remains limited. Its traditional safe-haven appeal appears to be waning amid concerns over the ballooning US budget deficit and erratic trade policy signals from the current White House administration.

The US Dollar Index is hovering near flat in today’s Asian session, after a modest gain of 0.3% on Friday, and continues to face resistance at its 20-day moving average near 99.20.

Gold (XAU/USD), after climbing for three straight sessions with a 3.4% gain last week, saw modest profit-taking today. The yellow metal slipped 0.09% to US$3,247 after reaching an intraday high of US$3,451—just 1.4% shy of its record high of US$3,500 set in April.

Economic data releases

Fig 1: Key data for today’s Asian mid-session (Source: MarketPulse)

Chart of the day – Potential bullish reversal in Hong Kong 33

Fig 2: Hong Kong 33 CFD Index minor trend as of 16 June 2025 (Source: TradingView)

Last Friday’s loss of -1.80% inflicted on the Hong Kong 33 CFD Index (a proxy of the Hang Seng Index futures) has managed to see a partial recovery in today’s Asian session as it rallied by 0.7% at the time of writing.

Interestingly, two key technical elements suggest that the minor corrective decline of -3.1% from the 11 Jun 2025 high to the 16 Jun 2025 current intraday low may have ended, and a potential bullish reversal process is likely to have emerged (see Fig 2).

Firstly, the price actions have rebounded just a whisker away from its rising 20-day moving average. Secondly, the hourly RSI oscillator has flashed a bullish divergence condition at its oversold region, which suggests a potential slowdown in downside momentum.

Watch the 23,600/23,440 short-term pivotal support, and a clearance above 24,200 near-term resistance sees the next intermediate resistance coming in at 24,490 in the first step.

On the flipside, a break below 23,440 invalidates the bullish tone to see an extension of the minor corrective decline to expose the next intermediate supports at 23,060 and 22,700 (also the 50-day moving average.

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