Israeli Stocks Brace for Opening Amid Inflation Data and Global Trends
Translated & summarized from Globes by baba
The Tel Aviv Stock Exchange is expected to open higher following a 0.5% drop in Israel's September consumer price index, which fell below expectations. Global markets are also showing optimism, influenced by comments from Federal Reserve Chair Kevin Warsh regarding AI investment and interest rates. Dual-listed Israeli companies are showing mixed results, with some expected to rise significantly. The Israeli shekel has weakened against the dollar, and economists believe the Bank of Israel is unlikely to cut interest rates soon despite lower inflation.
The story in 6 lines · by baba
- Israel's September CPI fell 0.5%, leading to expectations of a positive opening on the Tel Aviv Stock Exchange.
- Federal Reserve Chair Kevin Warsh's comments on AI investment reduced market bets on an October interest rate hike.
- El Al and Doral Energy will join the TA-35 index in November, replacing Damari, Shufersal, and Canon.
- Electra Real Estate and Opko Health shares surged approximately 25% each on the TA-125 index.
- The Israeli shekel weakened against the dollar, closing at 3.103 shekels.
- Economists believe the Bank of Israel will likely hold interest rates steady due to housing market pressures.
Israeli investors are anticipating a positive opening on the Tel Aviv Stock Exchange, buoyed by a better-than-expected drop in September's consumer price index (CPI). The CPI fell 0.5% in September, bringing the annual inflation rate to 1.6%, below forecasts. This positive domestic news coincides with global market optimism, partly fueled by Federal Reserve Chair Kevin Warsh's comments on the economic benefits of AI investment. Warsh's remarks, made during a meeting with IMF Managing Director Kristalina Georgieva, also contributed to reduced market expectations for an October interest rate hike in the US.
Dual-listed Israeli companies are returning to Tel Aviv with positive gains, although some, like Teva and ICL, saw slight declines. Camtek is expected to jump over 5%, while Tower and Nova are projected to rise around 3.5%. Investors are also watching for changes in the TA-35 index, with El Al airlines and Doral Energy set to be included for the first time in November, replacing Damari, Shufersal, and Canon.
Yesterday's trading session closed mixed, with the TA-35 index down approximately 0.2% and the TA-90 index up about 0.3%. Real estate and construction indices led the gains, while cleantech and technology indices fell. Tower, Camtek, and Nova, semiconductor stocks, were notably down due to negative sentiment on Wall Street. Electra Real Estate and Opko Health were standout performers in the TA-125 index, both surging around 25% on separate corporate news.
Globally, Asian markets are recovering after recent sell-offs in tech stocks. US markets saw a mixed opening but ended with gains, though concerns over AI spending continue to drive investors toward safer assets like bonds. The 10-year US Treasury yield has fallen to around 5.09%. Meanwhile, the Israeli shekel has weakened against the dollar, closing at 3.103 shekels, erasing recent gains.
In Israel's macroeconomy, the September CPI decrease was driven by lower prices in culture, entertainment, and transportation, while fresh produce and rent saw increases. Housing prices also declined by 0.6% in July-August. Economists suggest that despite the lower-than-expected inflation, a rate cut by the Bank of Israel is unlikely in the immediate future due to housing market pressures and potential currency depreciation.
Looking ahead, Playtika, an Israeli gaming company, has reached an all-time low valuation on Nasdaq, significantly down from its IPO price. Analysts remain largely neutral on the stock, with a few holding a positive outlook but lowering price targets.
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