Asia Markets in Green in Spite of Continued Israel – Iran Conflict

June 16, 2025 – Asian equity markets began the week with resilience, despite a fresh spike in oil prices driven by escalating tensions between Israel and Iran. Oil prices increased as concerns over potential disruptions in global supply intensified, yet investor sentiment remained steady across major markets. With a packed week of bank meetings, markets are staying cautious.

At 12:50 p.m. Indian Standard Time, 16th June, 2025, Nikkei 225 is up by 477 points or 1.26%. Hang Seng is up by 198.42 points or 0.83%. Shanghai composite is up by 11.73 points or 0.35%.

Market Snapshot: Asia Edges Up, China Retail Data Exceeds Expectations

Markets across Asia showed signs of strength:

• Japan’s Nikkei 225 rose 1.1%
• South Korea’s KOSPI gained 1.5%
• Chinese blue chips (CSI 300) ticked up 0.1% after retail sales surged 6.4% in May, comfortably beating expectations, while factory output met forecasts
• MSCI’s Asia-Pacific Index (ex-Japan) advanced 0.3%

US futures also stabilized, with the S&P 500 and Nasdaq gaining 0.2% and 0.3% respectively.

Oil Rally Continues, But Gains Moderate

After surging 13% last week, oil prices added another 1%, fueled by fears that the Israel-Iran conflict may escalate further and disrupt shipments through the key Strait of Hormuz. However, early spikes were pared by midday:

• Brent crude rose 73 cents to $74.63/barrel
• US crude gained 73 cents to $73.49/barrel

The sustained rise in oil prices adds inflationary pressure, potentially influencing the US Federal Reserve’s policy stance ahead of its meeting on Wednesday.

Global Currency Movements: Oil-Linked FX Gains, Yen and Euro Slip

The US dollar held firm:

• At 144.17 yen
• Euro remained steady at $1.1545

Oil-exporting currencies like the Norwegian crown and Canadian dollar outperformed, while import-heavy economies such as Japan and the EU saw pressure on their currencies.

Investor Outlook: Fed, BOJ, and Other Central Banks in Focus

Investors are now eyeing several key monetary policy decisions:

• US Fed expected to hold rates steady at 4.25%–4.5%, though markets see a small chance of a rate cut in September
• Bank of Japan expected to keep rates at 0.5% during Tuesday’s meeting but could signal future tightening
• Swiss National Bank is likely to cut rates to zero or below
• Central banks in Norway and Sweden are also meeting this week, with Sweden potentially trimming rates

Bond yields remained stable with US 10-year Treasury yields at 4.43%, indicating limited demand for safe havens despite global tensions.

Commodity Watch: Gold Steady Amid Tensions

Gold saw modest support as a safe-haven asset, holding at $3,430/oz amid the Middle East unrest.

Asian markets’ composure suggests cautious optimism even as geopolitical uncertainties and central bank decisions loom large. All eyes now turn to the Fed’s tone and projections, which could steer global sentiment in the days ahead.

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