Five things to know ahead of the stock market opening
Trading on the local stock exchange will open today against the backdrop of positive sentiment in technology stocks. Dual-listed stocks will open with a positive gap, led by the chip sector. The $30 trillion time bomb: why the surge in US bond yields threatens stock investors? Inflation has moderated, but why doesn't this mean the Fed has had the final word? Is SpaceX a space giant or an AI hyperscaler? Globes puts things in order ahead of the market opening.
Trading review: ongoing reports, trends, indices, stock prices, bonds, foreign exchange and commodities, and analyst recommendations.
1. Stock market
Trading on the local stock exchange will open today against the backdrop of the positive sentiment recorded last night on Wall Street and the sharp surges this morning on Asian stock exchanges, led by the technology and artificial intelligence sector. Dual-listed stocks return to the Tel Aviv Stock Exchange with a positive weighted arbitrage gap of 0.63% on the TA-35 index (and a current theoretical impact of -0.26%), with the chip and technology sector leading the green trend. Among the notable gainers are BrainsWay, showing a positive gap of about 5.4%, Camtek and Gilat, returning with a positive gap of about 3.4%, ICL with a positive gap of about 2.3%, as well as NICE (1.1%) and Palo Alto (1.4%).
On the other hand, notable declines are recorded in Ormat Technologies, returning with a negative gap of about 2.6%, Tower (2.1%), Nayax (1.8%), Enlight Renewable Energy (1.6%), and Allot (3.0%). Among small-cap stocks, unusual arbitrage gaps are recorded, led by XTL, while CyberArk and Purple Biotech return with sharp negative gaps.
In Asia, this morning, trading on the continent's stock exchanges is mostly positive, with the KOSPI index in South Korea stealing the show, surging by 3.7%, showing a recovery of about 23% from the late July low and officially entering bull market territory. The sharp gains in Korea are led by chip giants Samsung Electronics and SK Hynix, receiving a strong tailwind from the renewal of positive sentiment around AI investments and the strong results published by AI companies in the US.
Yesterday, the Tel Aviv Stock Exchange closed trading in a mixed trend. The TA-35 index jumped by about 1.1%, while the TA-90 index lost about 0.6% of its value. The rise in the TA-35 index strengthened towards the end of the trading day, in light of the positive sentiment recorded on Wall Street, where the Consumer Price Index showed that the annual inflation rate fell from 3.5% to 3.4%, in line with expectations.
2. Bond markets
In the government bond market in Israel, a mixed trend is recorded along the yield curve, which maintains an upward (normal) slope structure. The short-term yield for two years rises by 0.26% and reaches a level of 3.432%. In the medium-long term, the 10-year yield records a rise of 0.29% and trades at a level of 3.848%. On the other hand, in the longest part of the curve, a slight decline is recorded, as the yield on the 30-year bond weakens by 0.11% to a level of 4.409%.
In the US, the government bond market, with a massive volume of about 30 trillion dollars, is facing a deep shock that threatens the stability of portfolios in the markets. The yield on the 30-year bond recently climbed to a level of 5.28% - a record not seen since the summer of 2007. While in the past inflation was the central engine for rising interest rates, now it is a dangerous combination of huge government deficits, massive debt raising by technology giants, a decline in demand from foreign governments, and a rise in the term premium.
3. Commodity and currency markets
In foreign exchange trading held yesterday, the shekel showed resilience against the American currency, as the dollar fell by 0.66% and traded around a rate of 2.9824 shekels. This movement occurs against the backdrop of opposing forces currently operating in the global and local market: on one hand, the moderation of employment data in the US weakened the dollar globally, and on the other hand, the surge in oil prices and the tension in the Strait of Hormuz are resurfacing inflationary concerns.
Oil prices stopped this morning after a streak of five days of gains, against the backdrop of growing doubts regarding an agreement that would allow the reopening of the Strait of Hormuz. Brent crude oil futures are falling by 0.56% to a level of 88.48 dollars per barrel, and US oil futures (WTI) are weakening by 0.76% to 82.64 dollars per barrel.
4. Macro
The US Consumer Price Index for July, published yesterday, presented an apparently encouraging picture - monthly price increases stood at only 0.1%, which lowered the annual rate to 3.4% - a three-month low. Core inflation stabilized at only 2.5%. But anyone looking under the surface discovers a market that is far from calm, where deep structural forces continue to threaten monetary stability.
Yoni Fanning, chief strategist of the finance division at Mizrahi Tefahot Bank, points to the structural forces that could thwart the continued decline in inflation. He explains that "unlike the 2022 wave, where fuel prices pushed core inflation above 6% and required two years of interest rate hikes to deal with inflation, today, the absence of a fuel shock is notable for the better. On the other hand, the surge in AI investments is estimated at half a percent of GDP, and combined with tariffs and the reduction in foreign workers, the pressure falls on local supply."
5. Forecast
The capital market continues to follow the SpaceX stock with anticipation as the stock closed the trading day yesterday with a surge after the stock rose by more than 35% in the last week. The company's shares are currently trading at a level of about 146 dollars (with a market value estimated at 1.93 trillion dollars) - a level not far from its historical IPO price in June (135 dollars), and almost 28% below the peak of 211.39 dollars recorded a few days after it was issued.
At an extensive employee meeting held by Elon Musk at SpaceX, he scattered dramatic statements regarding the change in the company's center of gravity. According to Musk, the company's revenues from the field of artificial intelligence are expected to exceed all revenues from space activity (satellites, launches, and Starlink) as early as September, and expand even further in the fourth quarter of the year. "The future is artificial intelligence and robots," Musk clarified, defining SpaceX not only as a space company, but as an AI infrastructure company and an extensive computing platform.
