Tel Aviv Stock Exchange Opens Higher Amid US Tech Rally and Geopolitical Developments

The Tel Aviv Stock Exchange is set to open with positive momentum following gains on Wall Street, particularly in the technology and semiconductor sectors. Dual-listed shares are showing a notable arbitrage gap near 7%, with Tower Semiconductor, Nova, and Camtek leading gains up to 3.5%, and Teva Pharmaceuticals rising nearly 3%. Despite closing June with losses, the worst since October 2023 amid geopolitical tensions including the US-Iran memorandum and Israel-Lebanon framework agreement, the TA-35 index rose 1.3% on Tuesday, led by a nearly 4% surge in the defense sector. Satellite company Gilat soared after securing $43 million in follow-up orders, while real estate firm Boni Tachton jumped following a deal to sell 49% of two urban renewal projects for about 78 million shekels. Conversely, Ashtrum Group shares declined after Migdal Insurance acquired a 20% stake in its residential rental operations.

Wall Street closed the second quarter with its strongest performance since 2020, driven mainly by the semiconductor sector, which saw the SOXX ETF rise over 90%. Memory and storage chipmakers like Micron and Sandisk posted exceptional gains, while AI-related chip stocks such as Nvidia showed more modest increases. Analysts have upgraded growth forecasts for chipmakers’ earnings and revenues through 2027, despite recent volatility and a nearly 8% weekly drop in the semiconductor index.

In local bond markets, Israeli government bonds showed slight price increases, with the Tel Gov Shekel 10+ index up 0.4% in June and yielding around 4%. Investors are favoring longer-dated bonds amid expectations of interest rate cuts by the Bank of Israel. The shekel remained stable against major currencies, with the dollar fixed at approximately 2.978 shekels and the euro at about 3.94 shekels. Oil prices stabilized after earlier gains related to US-Iran tensions, with market analysts expecting prices to remain near current levels due to ongoing disruptions at the Strait of Hormuz.

Ahead of the US employment report due Thursday, economic experts at Harel Insurance suggest the Federal Reserve may delay further rate hikes, citing signs of economic slowdown and weak consumer demand. The consensus forecast anticipates a moderate addition of 118,000 jobs in June.

Looking forward, Cantor Investment Bank remains bullish on the semiconductor sector, projecting the market could reach $3 trillion by 2029 and $3.5 trillion by 2030, fueled by AI infrastructure growth and supply chain constraints. Analyst CJ Muse raised price targets for key chipmakers including Applied Materials, ASML, KLA, and Intel, with top picks being Micron, Sandisk, Western Digital, Seagate Technology, Nvidia, Broadcom, and AMD. Israeli chip equipment firms Nova and Camtek are also expected to benefit, maintaining their current target ratings.