Global Rate Hikes and Inflation Drive Market Volatility
Global central banks are raising interest rates, with Japan nearing a 30-year high and the U.S. Federal Reserve poised for its first hike in three years. The primary concern is not just the rate increases themselves, but a potential return to persistently high interest rates. This, coupled with oil prices exceeding $100 per barrel, fuels upward price pressure and inflation, described as a "snowball effect." Rising wages further exacerbate this, as increased consumer spending drives up prices.
The U.S. rate hikes are strengthening the dollar, as investors seek higher yields on dollar-denominated assets, potentially leading them to sell Israeli government bonds and shekels. U.S. 10-year Treasury yields are around 4.9%, with 30-year yields above 5.3%. This makes investing in stocks, which often have high multiples like the S&P 500 at around 24-25, less attractive compared to the guaranteed returns of bonds, despite potential future profit growth in equities.
Market sentiment is sensitive to any hints from the Fed about future rate hikes, which could negatively impact the market, though current assessments suggest this might be a one-time event. The article also notes that the end of the conflict with Iran could lead to a sharp drop in oil prices.
In local market news, Altshuler Shaham Finance is nearing a deal to sell approximately 55.1% of the company for about 1.8 billion shekels. The CEO, Yair Levinstein, is expected to join a local investor in acquiring control. This sale follows years of capital outflows and declining managed assets, with the new owners facing the challenge of stemming client departures and stabilizing revenues.
Dual-listed stocks are showing mixed performance. Oremat is expected to drop significantly, around 3.6%, while Kamatech is projected to rise over 3.2%. Separately, Kadma Fund has offered to acquire Averbuch for 190 million shekels, a premium of about 133% over its market price, due to its real estate assets. Sherin, a dual-listed company involved in diamond polishing technology, is experiencing revenue declines and losses despite new product lines, with its CEO looking to AI for a turnaround.
