Geopolitical Tensions Loom Over Hang Seng After U.S. Strikes in Iran

The Hang Seng Index is expected to face downward pressure on Monday as investors react to escalating tensions in the Middle East. This follows a brief recovery on Friday where the index climbed 292.78 points, or 1.26%, to close at 23,530.48, recovering from a previous three-day losing streak. Friday's rally was broad-based, with significant gains in the financial and property sectors. Notable performers included New World Development, which surged 5.37%, and China Life Insurance, which rose 4.74%. Technology shares also contributed to the lift, with Xiaomi Corporation advancing 1.89% and Alibaba Group gaining 1.55%. However, this optimistic momentum is being overshadowed by reports that the United States bombed three suspected nuclear development sites in Iran. While the White House previously mentioned the possibility of negotiations, the direct military action has introduced significant uncertainty into the global market outlook, likely dragging Asian indices 'under water' at the next open. Wall Street ended the week on a mixed note, with the Dow marginally higher at 42,206.82, while the NASDAQ and S&P 500 both closed in the red. Adding to the macro headwinds, the Philadelphia Fed reported continued weakness in regional manufacturing activity for June, with the diffusion index remaining negative and missing economist expectations. Commodity markets reacted with mixed signals as West Texas Intermediate crude slipped $0.21 to close at $74.93 per barrel. Traders are now pivoting their focus toward the fallout from the U.S.-Iran conflict, which is expected to override the short-term technical recovery seen in Hong Kong shares.