Global Markets Brace for Mixed Open Amid Inflation Fears and Geopolitical Tensions
The Tel Aviv Stock Exchange is expected to open lower on Tuesday, influenced by a negative close on Wall Street and a projected negative arbitrage gap. Investors will be monitoring a slight easing in oil prices, ongoing pressure from the US bond market, and a strengthening dollar. Dual-listed stocks are anticipated to pull the TA-35 index down by approximately 0.24% at the open, with Teva, Nice, Ormat Technologies, and Elbit Systems leading the decline due to negative arbitrage gaps. Conversely, the chip sector, including Camtek, Nova, and Tower, is expected to provide some support with positive gaps, while Palo Alto Networks shows a strong positive gap of around 4%.
On Monday, the Tel Aviv market closed down, mirroring global sentiment. The TA-35 index fell 0.2% and the TA-90 index dropped 0.8%. Real estate and insurance sectors saw declines of over 1%, while cleantech, energy, and technology sectors bucked the trend. Nice stood out with a significant jump following reports of advanced talks to sell its Actimize division for approximately $2 billion. The green energy sector also attracted interest, with Doral Energy leading gains due to projected revenues from a shared server farm. Conversely, the chip sector faced a cautious recommendation from Cantor Fitzgerald for Nova and Camtek.
In the US, Wall Street indices experienced pressure on Monday, driven by rising inflation concerns and the prospect of further interest rate hikes. The S&P 500 fell 0.6%, the Nasdaq lost 1.2%, and the Dow Jones dropped 0.5%. The VIX fear index rose about 6% but remained below its 200-day moving average. Geopolitical tensions, particularly indirect talks between the US and Iran, contributed to a nearly 3% surge in Brent crude oil prices, pushing US 10-year Treasury yields to a 19-year high of 5.1%. Stronger-than-expected US macroeconomic data, indicating a five-year high in business activity, further fueled inflation fears and reinforced expectations of additional rate hikes from the Federal Reserve.
In the Israeli bond market, Bank Jerusalem successfully raised NIS 433 million in a new bond series, exceeding its initial target due to strong demand. The bonds offer an annual interest rate of 2.58%. In the government bond market, the yield curve "steepened" on Monday, with short-term yields falling and long-term yields rising. The US Treasury market experienced significant turmoil, with the 10-year yield jumping 13 basis points to 5.1%, the sharpest daily increase in 18 months and a level not seen since July 2007. This surge was attributed to strong PMI data, hawkish comments from Fed officials, high oil prices, and a weak auction of 5-year Treasury notes.
Global commodity markets saw oil prices decline on Tuesday, with Brent crude trading around $102.2 per barrel and WTI at approximately $91.4. This dip followed reports of increased Asian oil imports. The dollar maintained its upward momentum against the shekel, trading slightly higher at around 3.03 shekels, driven by strong US macroeconomic data and rising Treasury yields, which reinforce expectations that the Federal Reserve will maintain high interest rates.