Global Markets Brace for US Inflation Data Amidst Tech Sell-off

The Tel Aviv Stock Exchange is set to open following a significant drop in Wall Street's technology stocks. Asian markets are trading mixed, while New York futures indicate slight gains. Local dual-listed stocks are expected to weigh on the market, with Tower Semiconductor and Nova facing potential declines of approximately 4.7% and 3% respectively. Palo Alto Networks is also anticipated to fall over 2%, while Teva Pharmaceutical Industries and Formula Systems may see increases of over 2% and 7% respectively.

Yesterday, the Tel Aviv market closed mixed, with the TA-35 index down 0.2% and the TA-90 index up 0.6%, though still at a year-long low. The trading was influenced by rising oil prices and volatile US bond yields. The insurance index rose 1.8%, and the oil and gas index gained 0.8%, boosted by oil prices and a strong performance from Bazan. However, construction and biomed indices fell 1.8%.

Globally, US tech stocks experienced a downturn, led by AI companies like Nvidia, AMD, and Oracle. The Nasdaq fell 1.3%, the S&P 500 dropped 0.5%, and the Dow Jones saw a minor gain of 0.1%. The decline was triggered by a Financial Times report indicating OpenAI's annual revenue run rate is significantly lower than market expectations. This news impacted semiconductor ETFs, with the SOXX ETF falling 3.3% and the DRAM ETF losing 5%.

In the bond market, US Treasury yields closed lower after an initial surge, though they remain at multi-decade highs. The 10-year yield fell to 5.22% and the 30-year yield to 5.6%. Federal Reserve Governor Christopher Waller suggested further interest rate hikes might be necessary to curb inflation, but not necessarily consecutively. President Trump's statement that the US would not attack Iran before the November midterm elections also contributed to a market calming.

Commodity prices are down this morning, with Brent crude trading around $103 per barrel and WTI around $90, following yesterday's rise due to tensions with Iran. The Israeli Shekel strengthened 0.2% against the dollar, trading at 3.05. Investors are now focused on upcoming US inflation data, with CPI and PPI reports due Wednesday and Thursday, respectively, which are expected to be crucial given sticky inflation concerns and ongoing hawkish messages from Fed officials.

Looking ahead, Micron Technology's stock, which has more than tripled this year, is seen by some analysts as having significant further upside potential. D.A. Davidson has raised its price target for the stock to $3,000, citing the increasing demand for memory in AI applications. Most analysts remain positive on Micron, with a consensus 'buy' rating and an average price target indicating over 50% upside.