Trading is expected to start mixed, with investors watching signs of a possible U.S.-Iran deal after Bloomberg published overnight a 14-point draft memorandum of understanding. Against that backdrop, dual-listed Israeli shares are coming back with a steep negative arbitrage gap of about 1.2%. Nova stands out on the downside with a drop of nearly 7%, followed by Tower and Camtek at about 4.5% lower, while Enlight and Ormat are also expected to weaken. In Asia, markets are mixed, and Tel Aviv closed lower yesterday, with the TA-35 down about 1% and the TA-90 off about 1.5%.
The local market was hit by broad declines, led by cleantech and insurance. Almost all sector indexes ended in the red except oil and gas, which jumped 2.4% after Chevron, operator of the Tamar gas field, said it boosted maximum daily output capacity by 45%. The expansion, costing $664 million, included a third gas pipeline from Tamar to the Ashdod production platform, 150 kilometers away, and compressor upgrades at the site. Isramco and Tamar Petroleum surged on the news. In New York, markets closed mixed as investors rotated from technology into traditional sectors. The Nasdaq fell 1.1%, the S&P 500 lost 0.6%, while the Dow Jones rose 0.9% to a record and has gained more than 8.5% this year.
U.S. chip stocks slid sharply as the SOXX ETF dropped about 6%, with Intel and AMD leading the decline and Nvidia also lower. SpaceX briefly passed Amazon and even Microsoft in market value, reaching an intraday high of $225.64 a share and nearly $2.97 trillion, before ending around $2.6 trillion. The company also said it will buy Anysphere, maker of the Cursor AI coding tool, for $60 billion, one of the biggest AI deals so far. Separately, Yum! Brands agreed to sell Pizza Hut for $2.7 billion in a two-part transaction, with LongRange Capital buying the global business for $1.5 billion and Yum China paying about $1.2 billion for the China unit.
Bond markets moved unevenly as the Iran-U.S. deal talk cooled sentiment in Israel. Israeli government bonds were mixed, while the 10-year shekel bond still rose 2.7% over the past month and its yield fell from about 4% to 3.67%, reflecting lower perceived risk and expectations for Bank of Israel rate cuts. In the U.S., Treasury yields fell with oil prices, as the 10-year yield dropped more than 3 basis points to 4.43% and the 2-year yield eased to 4.05%. The shekel strengthened 0.2% to 2.91 per dollar, while Brent traded around $78 a barrel and WTI near $75 after a 5% drop yesterday.
Analysts are also watching the Federal Reserve’s first rate decision under new chair Kevin Warsh. Pictet expects the policy rate to remain unchanged at the upper bound of 3.75%, and says there will be no more cuts in 2026. EY-Parthenon’s Greg Daco said Warsh’s first challenge is to prove his decisions rest on economics, not politics. Bank of America expects the Fed’s dot plot to signal rates staying unchanged through year-end, with some officials penciling in 25 to 50 basis points of hikes in 2026. Separately, BofA’s monthly fund manager survey suggests the AI rally may still have room to run, with 56% calling the current phase a “boom” and only 21% seeing “euphoria.”
