Iran and Israel confront each other across the air, analysis of short-term trends of spot gold, silver, crude oil and foreign exchange on June 16

Global Market Review

1. European and American market trends

The three major U.S. stock index futures rose, Dow futures rose 0.44%, S&P 500 futures rose 0.56%, and Nasdaq futures rose 0.65%. The German DAX index rose 0.51%, the UK FTSE 100 index rose 0.48%, the French CAC40 index rose 0.81%, and the European Stoke 50 index rose 0.57%.

2. Market news interpretation

Iranian-Israeli confrontation both said that the United States knew about the Israeli attack on Iran

On the 15th local time, Iranian President Pezekichiyan and Israeli Prime Minister Netanyahu had a confrontation over the recent conflict. Pezeshiziyan said that Iran "retaliated counterattack" against Israel's aggression; Netanyahu said that Israel's actions "not only are self-defense, but also protecting many countries." On the 15th, Iranian President Pezekichiyan said at a cabinet meeting that Israel's recent attacks on Iran were carried out at the instruction of the United States and warned of a "strong fight back" against Israel's aggressive behavior. Israeli Prime Minister Netanyahu said in an interview on the 15th that Israel had notified US President Trump before the attack began and jointly intercepted drones flying to Israel with the US Air Force. Netanyahu said, "The world's most dangerous regime cannot be allowed to possess the world's most dangerous weapons." He said Israel's actions "not only are self-defense, but also protecting many countries."

Persian Gulf ship signal interference has intensified, but Iran may not use the ultimate bargaining chips to block the Strait of Hormuz

As the conflict between Iran and Israel intensifiesAs the intensity became more and more intense, the navigation signals of more than 900 ships in the Strait of Hormuz and the Persian Gulf showed abnormalities over the weekend, causing chaos in the main shipping throat. Data shows that some ships in the area have trajectories that are impossible straight lines, shuttle in jagged shapes on the water surface, or appear on the shore. Since Friday, these failures have affected various ships such as tankers, freighters, tugboats and fishing boats, forcing crew members to rely more on radar, eouu.cnpass and naked-eye observation, increasing the risk of collisions. The United Maritime Information Center (JMIC) warned on Sunday that the signals from the Iranian port of Abbas were "extremely disturbed." However, JMIC said there is currently no indication that the Strait of Hormuz may be blocked, which undertakes more than a quarter of the world's oil trade. The UK Maritime Trade Coordination Centre also expressed similar concerns on Monday, noting that interference has intensified in the Gulf region, affecting the way ships report locations through automated systems.

Tehran is preparing to give up uranium enrichment, but needs a way out to "preserve face"

A senior Iranian diplomat revealed in an interview that Iran's military and political leadership is ready to give up uranium enrichment in order to maintain the regime. "But we need a solution that protects our faces," the diplomat, who spoke on condition of anonymity, said. "The real priority of the Supreme Leader and our government is to survive. The ongoing attacks and counterattacks between Israel and Iran will inevitably weaken our military, security forces, economy, public morale, and ultimately weaken our government." "The military and the Islamic Revolutionary Guard will inevitably lose control of the situation, and no one knows what will happen next. We don't want to repeat the mistakes of Saddam Hussein. We are ready to negotiate." The diplomat, like many Iranian diplomats, has served in the Iranian intelligence service.

Eurozone Treasury yields rose, oil prices and Fed policies became the focus

⑴On June 16, eurozone Treasury yields rose, as inflation concerns eased after oil prices stabilized, investors were waiting for the Federal Reserve policy meeting later this week. ⑵ Iranian missile attacks Israel sparked concerns at the G7 meeting this week, fearing that the conflict could escalate into a broader regional conflict. ⑶ However, oil prices fell slightly on Monday as military strikes did not affect oil production and export facilities. ⑷ Germany's 10-year government bond yield rose 1 basis point to 2.54%, after hitting a weekly high of 2.588%, while Friday's low was 2.422%, the lowest since March 3. ⑸ The yield on the two-year treasury bond remained flat at 1.86%. ⑹ European Central Bank officials stressed the risk of inflation, the central bank needs to remain vigilant, and future policy choices need to remain open. ⑺ European Central Bank Deputy Governor Louis Dekindos said the central bank will pay more attention to the side effects of loose monetary policy. ⑻This week, the monetary policy decisions of the Bank of Japan and the Bank of England were also the focus of market attention. ⑼The Federal Reserve is expected to keep interest rates unchanged, and investors are paying attention to new central bank forecasts.

The Indonesian Central Bank expects to keep interest rates unchanged

⑴ Indonesian Central BankThe bank will announce its interest rate decision on June 18, and according to a Reuters survey, two-thirds of economists expect the central bank to keep interest rates unchanged at 5.50%. ⑵ Twenty-one of the 31 economists expect interest rates to remain unchanged, while the 10 expect interest rates to be cut by 25 basis points to 5.25%. ⑶ The Indonesian central bank may prioritize the stability of the Indonesian rupiah, which has appreciated nearly 4% since early April. ⑷ The Federal Reserve is expected to keep interest rates unchanged by September, and the Indonesian central bank may want to maintain interest rates different from the United States. ⑸ Indonesian Central Bank cut interest rates by 25 basis points in May to support the economy, but continuous interest rate cuts may trigger concerns about the worsening outlook for economic growth, which in turn affects market sentiment and currency. ⑹Some economists warn that tensions in the Middle East have triggered global risk aversion, which may lead to capital outflows in emerging markets and put pressure on the Indonesian rupiah.

U.S. senator takes action to limit the president's power to launch wars against Iran

⑴ A Democratic senator in the United States proposed legislation to prevent the president from using force against Iran without the authorization of Congress. ⑵The background of this action is the escalating conflict between Israel and Iran, which has caused concerns about a larger-scale conflict. ⑶Virginia Senator Tim Kane has been trying to return to Congress's declaration of war for many years. ⑷In 2020, Kane proposed a similar resolution to limit the president's ability to launch a war, which was passed in both the Senate and the House of Representatives, but failed to obtain enough votes to resist the president's veto.

The uninterrupted crude oil supply in the Middle East is the key

⑴When tensions in the Middle East escalate, paying attention to what has not happened is as important as what has happened. ⑵ So far, the supply of crude oil in the Middle East has not been interrupted, which is beneficial to all parties. ⑶In the early Asian session on June 16, Brent crude oil futures rose 2.1% to $75.76 per barrel, after Brent crude oil prices soared 7% on June 13 due to Israel's air strikes on Iran. ⑷ However, the reaction of physical crude oil prices in the Middle East was more moderate than that in the paper market, with Dubai crude oil swap prices rising 5.8% on June 13, lower than the 7% increase of Brent crude oil. ⑸ This suggests that traders and refiners may be less concerned about supply disruptions than Brent paper investors. ⑹ Nevertheless, the rise in crude oil prices is reasonable as the conflict continues. ⑺The key is whether Iran’s crude oil production and export infrastructure is facing real risk of attack and whether Iran will block the Strait of Hormuz. ⑻The Strait of Hormuz is a key channel for global oil transportation, with about 20 million barrels of oil passing every day, accounting for one-fifth of global oil consumption. ⑼Iran's blockade of the Strait of Hormuz will make it unable to export crude oil itself, and it will also trigger intervention from other countries. ⑽As the world's largest crude oil importer, China hopes that the conflict will cool down quickly, while the United States has said it will help Israel defend itself, but will only intervene if Iran directly attacks U.S. interests.

Russia's oil freight rates to India have fallen, EU price limits may reverse the trend

⑴ From late May to early June, Russia has moved from the Baltic Sea PortThe freight rates for transporting oil from ports to India have further declined, mainly due to the adequate supply of tankers. ⑵ However, this trend may be reversed if the EU proposes a lower price cap. ⑶ The EU proposes to reduce the G7 price cap on Russian crude oil from US$60 per barrel to US$45. ⑷ Since the end of 2022, the G7 and the EU have imposed a $60 price cap on Russian crude oil, limiting purchases that exceed the cap to obtain Western shipping and insurance services. ⑸ As the price of Russian flagship Ural crude oil has fallen below the upper limit, Western shipowners were able to return to their market. ⑹ Since early April, Ural crude oil prices in Russian ports have stabilized below $60, prompting more Western shipping eouu.cnpanies to resume transportation services, thus lowering freight rates. ⑺As of Wednesday, Ural crude oil loaded from the port of Primorsky in the Baltic Sea was about US$54.72 per barrel. ⑻The cost of transporting Ural crude from Baltic ports (including Ustiluga) to India fell from about $8 million in early March to an average of about $6 million in April and May, and is currently down to $5.5 million to $5.7 million.

3. Trends of major currency pairs in the New York Stock Exchange before the market

Euro/USD: As of 20:20 Beijing time, the euro/USD rose, now at 1.1575, an increase of 0.23%. Before the New York Stock Exchange, the price of (EUR/USD) stabilized after its recent intraday level rise, again stabilizing above key resistance at 1.1550, supported by (RSI) positive signals, despite reaching overbought levels, with the main bullish trend dominant, and its trading was carried out along a slash, with positive support from trading above the EMA50 continuing, strengthening the positive trend of this pair.

GBP/USD: As of 20:20 Beijing time, GBP/USD rose, now at 1.3581, an increase of 0.09%. Before New York, the (GBPUSD) price fell sharply in the last trading day after it tried to get the positive momentum it needed to help it attack the key resistance level of 1.3600 to rely on its EMA50 support.

Spot gold: As of 20:20 Beijing time, spot gold fell, now at 3416.71, a drop of 0.48%. Before the New York Stock Market, the (gold) price rose in the last intraday trading after its early decline was designed to unload overbought conditions, which was because we noticed that it reached oversold levels, opened the way to achieve more gains, and it successfully gained a positive momentum, which helped it maintain a bullish trend on a short-term basis while trading along a slash, leveraging the dynamic support it represents on the exchange above the EMA50.

Spot silver: As of 20:20 Beijing time, spot silver rose, now at 36.369, an increase of 0.19%. Before the New York Stock Market, the (silver) price rose on the last trading day, supported by its continuous trading above the EMA50, which represents the return of positive signals on the (RSI) after successfully getting rid of the previously clear overbought conditions, thus maintaining dynamic support for the positive trend during the last period when the main bullish trend dominates in the short term.

Crude oil market: As of 20:20 Beijing time, U.S. oil fell, now at 72.080, a drop of 1.19%. Before the New York Stock Exchange, the (crude oil) price fell in recent intraday trading, trying to find higher lows to help it get the positive momentum it needs to recover, dominating the main bullish trend in the short term and trading along the slash, noting that (RSI) reaches oversold levels, indicating a positive divergence that will increase the positive pressure.

4. Institutional View

RBC: U.S. stock markets are at risk of falling 20% ​​under high inflation scenarios

RBC strategists listed three potential situations for U.S. stock pullbacks in a report, pointing out that if oil prices rise, the S&P 500 may fall 20%. Strategists say U.S. stocks are fragile given the recent rebound and valuations look too high. They said that the wider the scope and longer the conflict in the Middle East will affect the greater the negative impact on the U.S. stock market. The worst-case scenario, they believe, is that the S&P 500 will return to its April lows if the conflict pushes up energy prices. In less serious cases, the index may fall by about 13%. Analysis shows that if inflation rate soars to 4%, profit growth from 2024 will be zero, the Federal Reserve has only cut interest rates twice, and the US 10-year Treasury yield remains at its current level, then by the end of the year, the benchmark stock index may fall to 4,800 points, nearly 20% below the current level.

UBS: The Bank of England is expected to keep interest rates unchanged this week

⑴UBS economists pointed out that the Bank of England's interest rate decision meeting this Thursday may keep interest rates unchanged. ⑵ Given the uncertainty of the UK's economic growth and inflation outlook, the central bank is expected to maintain interest rates at 4.25% in June. ⑶ However, UBS expects the Bank of England to cut interest rates in August and November, and reduce the benchmark interest rate to 3.75% by the end of 2025.

Dutch International: Bank of Japan keeps interest rates unchanged, and expectations of interest rate hikes are underestimated

⑴Fopesolle, a foreign exchange analyst at Dutch International, said that the market generally expects the Bank of Japan to keep interest rates unchanged at 0.5% this week. ⑵The focus of this meeting will be the Bank of Japan's interim assessment of government bond purchase operations. Despite speculation that the central bank may reduce quarterly purchases from 400 billion yen to 200 billion yen, it is expected to maintain its current pace. ⑶The Bank of Japan may not send too much interest rate signals in this meeting, but the overall risk tends to be hawkish. ⑷ The market's expectations for the Bank of Japan's interest rate hikes as early as July or September are too low, and the current pricing is 10% and 25% respectively. ⑸ The bank believes that the yen is currently an attractive hedging tool, especially when the US stock market is facing more geopolitical shocks. ⑹ However, excessive oil prices may weaken the yen's safe-haven appeal, but the Bank of Japan's hawkish adjustment is expected to eouu.cnpensate for this impact.

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