Global Markets Brace for Key Economic Data and Interest Rate Decisions
The Tel Aviv Stock Exchange is set to open the new civil year with cautious optimism, despite global markets facing headwinds. The TA-125 index saw a significant 37% surge last year, outperforming major US indices. However, current market sentiment is dampened by escalating US-Iran tensions and renewed concerns over the pace of AI development, following statements from AI leaders suggesting a slowdown in advanced model creation. This could impact dual-listed stocks, particularly in the semiconductor sector, with some expected to open with negative arbitrage gaps. Investors are also anticipating a busy week for macroeconomic data and interest rate decisions from the US Federal Reserve, the Bank of England, and the Bank of Japan.
Significant attention is also focused on the potential acquisition of Altshuler Shaham's provident and pension activities by Wishor, in partnership with Yair Levinstein. Altshuler Shaham's stock is expected to be a point of interest. In Israel, the trading week will be shortened due to Rosh Hashanah, with consumer price index data due on Tuesday. Analysts at Leader estimate that a reduction in fuel tax will support a lower September inflation index, with the one-year inflation forecast remaining at 2.1%.
Asian markets are experiencing mixed performance, with Tokyo's Nikkei 225 down 0.8% and South Korea's Kospi losing 2%. Hong Kong's Hang Seng saw a slight increase of 0.3%, while China's Shanghai index remained stable. Chip stocks are leading declines in Asia, with SK Hynix and Samsung Electronics weakening in South Korea, and SMIC falling in Hong Kong. SoftBank's stock plummeted in Japan after OpenAI's CEO indicated no IPO this year, impacting SoftBank's significant investment in the company.
US markets closed a volatile week with mixed results, though major indices ended the week lower despite Friday's gains. Higher-than-expected inflation data has led to increased expectations of further interest rate hikes by the Federal Reserve, providing some clarity for investors. In other news, Larry Ellison has reversed his decision to sell up to $7.5 billion in Oracle stock. The recent calls from AI leaders to slow down development, including OpenAI's decision to postpone its IPO, have sparked debate, with some, like former President Trump, emphasizing the need for the US to maintain its lead in AI.
The bond market saw the US Treasury increase its buyback program, but yields remained elevated due to inflation concerns. The 10-year US Treasury yield briefly touched 5% before settling slightly below. In contrast, Israel's government bond market performed favorably compared to Western markets, attributed to cumulative interest rate cuts, a decrease in risk premiums, and slowing inflation. The shekel has shown resilience, strengthening against the dollar over the past year, outperforming other major currencies, despite recent slight weakening attributed to global market influences and geopolitical tensions. Oil prices saw a weekly increase due to disruptions in the Strait of Hormuz and a key Saudi pipeline closure, with Brent crude trading around $107 per barrel.