Market status: Asian stock exchanges fall, and the rise in US bond yields sparks a wave of concerns

Trading review: current reports, trends, indices, stock prices, bonds, foreign exchange, commodities, and analyst recommendations. 7:05. The trading day globally opened on the wrong foot after President Donald Trump's threat to bomb Oman last night, along with a Reuters report that Iran is considering moving from a defensive policy to an offensive one, exacerbated market sentiment. Oil prices climbed and US government bond yields rose to new highs, partly due to renewed concerns about higher inflation in the long term.

Asia

Trading in Asia is taking place this morning with significant price declines, against the backdrop of the escalation between the US and Iran and the declines recorded yesterday on Wall Street. The Tokyo Stock Exchange weakened by about 1.8%, the Hong Kong Stock Exchange is losing about 0.8%, the Shanghai Stock Exchange weakened by about 0.4%, and the Seoul Stock Exchange is losing about 0.5% of its value. At the same time, trading in futures on Wall Street is taking place this morning with declines. Futures on the Dow Jones are trading slightly below the baseline, futures on the S&P 500 are weakening by about 0.3%, and futures on the Nasdaq are retreating by about 0.6%.

Wall Street

Last night, Wall Street opened the trading week with price declines, against the backdrop of rising tension between the US and Iran and climbing oil prices; this, as the 60-day ceasefire included in the memorandum of understanding between the two officially expired. The Dow Jones weakened by about 0.5%, the S&P 500 also fell by about 0.5%, and the technology-heavy Nasdaq lost about 0.3% of its value. Except for the energy sector, which climbed by about 0.9% against the backdrop of rising oil prices, all S&P 500 sectors closed the day in the red. Oil prices climbed by over 2%, with Brent crude trading around $90 a barrel and American oil (WTI) trading around $83 a barrel.

The rise in the risk level was also reflected in the American debt market, where the 30-year yield climbed by over 4 basis points and crossed the 5.3% threshold — its highest level in nearly two decades (since June 2007). The 10-year yield climbed by about 3 basis points to a level of 4.72%.

Among the few bright spots in the current trading day, one can find chip stocks, which actually concluded a positive day. The DRAM ETF, which tracks memory chip stocks, climbed by over 5%. In the background, US Secretary of Commerce Howard Lutnick told the Wall Street Journal that the Trump administration will not allow Apple to purchase chips from China. Shares of Micron, Western Digital, and Seagate traded in the green. The SOXX ETF, which tracks the broad chip index, also climbed by over 1%, with notable gains in stocks like Broadcom and Nvidia.

On CNBC, the positive sentiment was attributed to a Bloomberg report that the revenues of the AI company Anthropic doubled at least 14 times in the second quarter of the year. According to the report on the company's preliminary results, its revenues stood at over $11.5 billion, compared to $787 million in the same quarter last year.

In the earnings season today on Wall Street, two notable reports will be published. Retail giant Home Depot will publish its financial results and shed some light on the state of the American consumer. In this context, we will mention that tomorrow and on Thursday, reports from Target and Walmart are also expected, respectively. Another large company that will report today is BHP Group, the world's largest mining company.

Commodity and currency markets

In the local foreign exchange market, trading in the shekel yesterday was characterized by volatility. At the beginning of the day, the shekel strengthened against the dollar and traded for a short time slightly below the 2.95 shekel threshold. However, later in the day, against the backdrop of the rise in tension between the US and Iran, the trend changed and the shekel weakened against the American currency by about 0.2%, so its continuous rate closed slightly below the 2.97 shekel threshold. In light of the geopolitical developments, oil prices climbed yesterday by over 2%. This morning, prices continue this trend and are recording slight gains, with Brent crude trading around $91 a barrel and American oil (WTI) trading around $84 a barrel.

Tel Aviv

Dual-listed stocks will return from Wall Street with a total negative arbitrage gap of about 0.4%. Among the stocks that will stand out negatively: Tower is expected to fall by about 3% and Nice is expected to lose about 2%. The Tel Aviv Stock Exchange also opened the week with price declines, which intensified towards the close of trading, in light of the escalation in the conflict between the US and Iran. The TA 35 index weakened by about 0.7%, the TA 125 index lost about 1.1% of its value, and the TA 90 index fell by 2.7%. Thus, the second-tier stock index concluded its weakest day in about two months — since June 15, when the local market reacted sharply to the memorandum of understanding signed between the US and Iran.

The declines were led by the Cleantech index, which fell by 3.7%, but still leads the gains among sectoral indices since the beginning of the year, with a rise of about 30%. Following it, the real estate and construction indices stood out negatively, with declines of about 3.1% and 2.7%, respectively. The banking index also stood out negatively, weakening by 2.6%. The declines in the index were led by shares of International Bank and Mizrahi Tefahot, with the latter publishing its results for the second quarter and thus completing the banks' reports. On the other hand, insurance stocks climbed after Migdal published its results for the second quarter, in what opened the reports of insurance companies, which will publish their results in the coming two weeks. In fact, the insurance index is the only one that finished the day in the green, with a rise of about 0.2%.

In the earnings season in Tel Aviv, a number of notable reports are expected today, including from the software company Matrix, the investment house Meitav, and the real estate companies Mivne and Alony Hetz. The shopping center company Big will also publish its financial results.

Something else worth knowing

Markets are worried about the new heights to which US government bond yields have climbed following the escalation between the US and Iran. Matt Maley, chief market strategist at Miller Tabak + Co, told Bloomberg that "the fact that long-term government bond yields remain elevated even after last week's soft inflation data is something that creates some headwinds for investors".

ING economists wrote in a message to clients that "usually, moves above 4.65% in the yields of 10-year US government bonds came along with reassuring words from the Trump administration, which usually focused on a near solution to the war with Iran. This time, we are not hearing the same thing. In fact, the latest indications point to the fact that there is no solution on the horizon, with the end of the fragile 60-day ceasefire".