Five things to know before the stock market opens
The trading day is expected to open with declines. The escalation between the USA and Iran is dragging Asian stock markets down, while oil prices continue to climb. Wall Street closed in the red yesterday, with chip stocks being a bright spot. Government bond yields worldwide are climbing to new highs, which is triggering a new wave of concerns. Also: a research firm predicts an upside of over 16% for the S&P 500 in the next 12 months.
Trading review: reports, trends, indices, stocks, bonds, foreign exchange, commodities, and analyst recommendations.
1. Stock market
The trading day in Tel Aviv is expected to open with declines. Dual-listed stocks will return from Wall Street with a total negative arbitrage gap of about 0.4%, with Tower expected to fall by about 3% and Nice by about 2%.
Global markets opened on a sour note following President Donald Trump's threats toward Iran and reports of Tehran shifting to an offensive policy. Oil prices have climbed, and US government bond yields have hit new highs due to long-term inflation concerns. Asian markets are trading lower: Tokyo (-1.8%), Hong Kong (-0.8%), Shanghai (-0.4%), and Seoul (-0.5%). Wall Street futures are also declining: S&P 500 is down 0.3%, and Nasdaq is down 0.6%.
Yesterday, the TA-35 index weakened by 0.7%, the TA-125 lost 1.1%, and the TA-90 fell by 2.7%. The Cleantech (-3.7%), real estate (-3.1%), and banking (-2.6%) sectors led the declines. The insurance sector was the only one to finish in the green (+0.2%).
Maytronics shares jumped nearly 40% on news of talks with the FIMI fund. Meanwhile, Nike shares have fallen nearly 40% year-to-date, hitting lows not seen since 2014 due to stiff competition and criticism of its recovery strategy.
2. Bond markets
The yield on 30-year US government bonds surpassed 5.3%—the highest level since June 2007. The 10-year yield rose to 4.72%. Yields are also climbing globally in Canada, Germany, and Japan, where the 10-year yield reached 2.94% (a 30-year record).
3. Commodities and currency
The shekel continues to weaken, trading just above the 2.97 level against the dollar. Brent crude is trading around $91 per barrel, and WTI is around $84. The market is reacting with relative indifference to geopolitical tensions due to demand forecasts and rising US commercial inventories.
4. Macro
Annual inflation in Israel stands at 1.5%. Rafi Gozlan of IBI expects it to rise to 2.2% over the coming year due to budget adjustments and tax policies. In the US, the Empire State manufacturing index reached 20.6 points, significantly beating consensus estimates.
5. Forecast
Evercore ISI analysts predict that the S&P 500 could reach the 9,000-point level within the next 12 months, reflecting an upside of over 16%. Strategist Julian Emanuel notes that the current market shows signs of health, with investor portfolios being far more diversified than during the dot-com bubble era.
