Asian Markets Rally on SpaceX, Super Micro Earnings; Oil Prices Surge

Asian markets experienced a significant boost overnight, driven by strong earnings reports from SpaceX and Super Micro Computer. SpaceX exceeded third-quarter expectations with a 161% revenue increase, improving sentiment towards AI stocks. Super Micro Computer's higher-than-expected forecast also eased investor concerns about continued investment in AI infrastructure.

Oil prices climbed due to attacks on vessels in the Strait of Hormuz, which threaten supply, and a further decrease in U.S. industrial inventories. Brent crude oil surpassed $110 per barrel.

In Asia, South Korea's Kospi index surged 4.3%, recovering from previous losses, with chip manufacturers seeing significant gains. Japan's Nikkei 225 rose 1.6%, while Hong Kong's Hang Seng remained stable, and mainland China's market opened flat.

U.S. stock futures indicated a positive opening, with Dow Jones up 0.1%, S&P 500 by 0.3%, and Nasdaq by 1%. Yesterday, Wall Street reversed earlier losses, with the Nasdaq closing unchanged, the Dow Jones gaining approximately 0.9%, and the S&P 500 rising 0.2%. This recovery occurred amidst falling oil prices and expectations of a strong earnings season, overshadowing renewed volatility in tech stocks.

In Israel, dual-listed stocks, particularly Tower Semiconductor, are expected to weigh on the opening, with Tower returning to Tel Aviv with a negative arbitrage gap of about 5%. Other dual stocks like Teva, Elbit, Nice, and ICL are also anticipated to open lower. Yesterday, the Tel Aviv Stock Exchange closed higher, with the TA-35 index showing a marginal 0.2% increase, while the TA-90 index climbed 1.4%. The construction index notably rose 2.9%, with communication, software, insurance, and finance indices also showing gains.

Mike Wilson, Chief U.S. Equity Strategist at Morgan Stanley, believes the correction in the average U.S. stock is nearing its end, projecting the S&P 500 could reach 8,500 by mid-2027. He anticipates a few more weeks of volatility before a stronger finish to 2026. Wilson noted that while the S&P 500 has risen over 12% this year, more than half of the Russell 3000 stocks have fallen at least 20% from their peaks. He cited momentum position unwinding, AI spending concerns, geopolitical conflicts, and election uncertainty as factors. Wilson remains concerned about credit spread expansion for companies funding AI infrastructure, suggesting the next phase of the AI rally will be led by companies using the technology to boost revenue and profits, rather than chip makers.