Stocks Swing as Israel-Iran Conflict Weighs on Oil: Markets Wrap

By Pune Media On Jun 16, 2025

(Bloomberg) — Investors in Asia struck a cautious tone on Monday, as an escalating conflict between Israel and Iran pushed oil prices higher and raised wider questions about the long-run impact.

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As markets reopened following a weekend of strikes between Israel and Iran, investors appeared reluctant to make big bets in either direction. A gauge of Asian stocks was less than 0.1% higher and moves were mixed across the region. Japan’s Nikkei 225 was up 1%, buoyed by a weaker yen. Chinese stocks swung between small losses and gains.

“It is too early to tell if Asia’s markets can completely look through this rapidly evolving conflict that still matters greatly for the region’s energy security,” said Homin Lee, senior macro strategist at Lombard Odier Singapore Ltd. “The muted response perhaps reflects some relief over the relatively calibrated nature of airstrikes on both sides.”

Stocks had tumbled on Friday as investors reacted to reports that Israel had launched airstrikes against Iran. A major concern is that the conflict leads to a prolonged disruption to the supply of oil. That could weigh on the global economy and potentially fuel a round of inflation just as many central banks pivot toward easing. Brent crude rose as much as 5.5% in early trading before paring most of its gain.

Treasury yields rose at most major maturities. The 10-year yield was up two basis points to 4.42%.

The mixed picture from markets was partly because investors were weighing up local news against the Israel-Iran conflict. Japanese equities were helped by a mix of a weakening yen, which may boost companies with overseas revenues, and a rally in defense companies after reports that Japan and the EU would meet to discuss cooperation measures for the defense industry. The yen was around 0.3% weaker against the dollar.

Retail sales in China rose 6.4% in May, a much faster expansion than the estimated 4.9%. That figure came alongside a raft of data from the world’s second largest economy, which painted a mixed picture. But the surprise lifted sentiment, and helped Chinese stocks in Hong Kong pare earlier losses.

Investors are bracing themselves for a volatile week. A meeting of the Group of Seven leaders kicked off in a Canadian mountain resort on Sunday, and now looks set to be dominated by discussion of the conflict. The Federal Reserve and the Bank of Japan are among a raft of monetary authorities set to announce interest rate decisions.

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“Markets should be prepared for a prolonged period of uncertainty,” said Wolf von Rotberg, an equity strategist at Bank J. Safra Sarasin. “Hedging against potential oil supply-chain disruptions via exposure to the energy market and adding to gold, which may see an acceleration of its structural uptrend, are the best ways to protect a portfolio against a further escalation in the Middle East.”

Some of the main moves in markets:

Stocks

S&P 500 futures rose 0.2% as of 12:09 p.m. Tokyo time
Nikkei 225 futures (OSE) rose 1.1% at 10:52 a.m. New York time, the most since June 9
Japan’s Topix rose 0.6%, more than any closing gain since June 9
Australia’s S&P/ASX 200 was little changed
Hong Kong’s Hang Seng was little changed
The Shanghai Composite was little changed
Euro Stoxx 50 futures fell 0.1%, falling for the fourth straight day, the longest losing streak since June 2

Currencies

The Bloomberg Dollar Spot Index rose 0.1%
The euro fell 0.2% to $1.1531
The Japanese yen fell 0.2% to 144.39 per dollar
The offshore yuan was little changed at 7.1859 per dollar
The euro fell 0.2% to $1.1531
The British pound fell 0.2% to $1.3544

Cryptocurrencies

Bitcoin strengthened 1% to $105,774.56, ending a five-day losing streak
Ether strengthened 2.5% to $2,566.91, ending a four-day streak that saw a 11% decline

Bonds

The yield on 10-year Treasuries advanced two basis points to 4.42%
Australia’s 10-year yield advanced eight basis points, more than any closing advance since April 9

Commodities

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Chris Bourke and Aya Wagatsuma.