Israel Stock Exchange Opens Amid Key Inflation Data Releases
Translated & summarized from Globes by baba
The Tel Aviv Stock Exchange is opening with investors awaiting US and Israeli inflation data. Yesterday, the market closed with significant gains, led by the oil and gas sector, with Navitas Petroleum benefiting from the "Sea Lion" oil field approval. US Treasury yields have retreated, making corporate bonds appear more attractive than stocks, according to one economist. The Israeli Shekel has slightly strengthened against the dollar, while oil prices are seeing minor gains amid regional tensions.
The story in 6 lines · by baba
- Investors await US and Israeli inflation data as the Tel Aviv Stock Exchange prepares to open.
- The Tel Aviv Stock Exchange closed with sharp gains yesterday, with the TA-35 index up 1.7%.
- Navitas Petroleum shares surged after the UK approved the "Sea Lion" oil field development.
- US Treasury yields have retreated, leading some economists to favor corporate bonds over stocks.
- Israel's risk premium has increased due to global debt crises and regional security concerns.
- The Tel Aviv Stock Exchange has gained 43% year-to-date, with analysts raising price targets.
The Tel Aviv Stock Exchange is set to open with investors awaiting crucial inflation data from both the US and Israel. The US Consumer Price Index (CPI) for September is due today, with forecasts predicting a 3.6% annual increase, largely driven by energy prices. Israel's CPI for the same month will be released on Thursday evening, with expectations of a slight monthly decrease. Dual-listed Israeli stocks are expected to return from Wall Street with a slight positive arbitrage gap of approximately 0.2%. Tower Semiconductor is anticipated to jump over 4% at the open, while Nice and Palo Alto Networks shares are projected to decline.
Yesterday, the Tel Aviv Stock Exchange closed with significant gains, with the TA-35 index rising 1.7% and the TA-90 index climbing 2.1%, though still near an 11-month low. The oil and gas sector saw a notable increase, led by Navitas Petroleum, which surged following the final approval of the "Sea Lion" oil field development near the Falkland Islands. This development is significant given Argentina's long-standing claim to the islands. The approval paves the way for commercial oil production as early as 2027, benefiting Navitas and its British partner.
In the bond market, US Treasury yields have retreated, with the 10-year yield at around 5.2%. Meitav's Chief Economist, Alex Zabezhinsky, suggests that corporate bonds are currently a more attractive investment than stocks due to potential stock market bubbles and lower volatility. He notes that when corporate bond yields exceed 5%, stocks, on average, no longer outperform bonds but exhibit much higher volatility. JPMorgan has called the current opportunity in high-grade corporate bonds a "once-in-a-generation" event.
In local markets, Israel's risk premium (CDS) has risen 7% in the past month to 92 points, attributed to the US debt crisis, global yield increases, and potential security escalations in the Middle East, alongside domestic election uncertainty. The Israeli Shekel has slightly strengthened against the dollar, trading just below 3.07.
In the commodities market, oil prices saw a decrease yesterday, influenced by statements from US President Donald Trump regarding Russian oil supply. However, ongoing tensions between the Houthis and Saudi Arabia are currently supporting prices, with Brent crude around $106 per barrel and US crude near $94.
The Tel Aviv Stock Exchange has seen a 43% increase since the beginning of the year. Investment bank Jefferies has raised its price target for the exchange's stock to 172 shekels, citing growth in various segments and strategic plans for international expansion, data analytics, and AI-based products. The exchange is also reportedly considering acquiring the Cyprus Stock Exchange.
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