Tel Aviv Market Set for Gains Amid Global Tech Sell-Off and US Job Data Anticipation

The Tel Aviv stock market is expected to open higher following a strong start to the new trading month and quarter, despite June marking its worst month since the October 2023 Iron Swords war outbreak. Asian markets showed mixed trends, with sharp declines in South Korea and Japan due to local macroeconomic pressures and global negative sentiment, particularly in semiconductor stocks like Samsung and SK Hynix, which fell over 7% and 9% respectively. Conversely, Hong Kong's Hang Seng index rose by 1.2%. In Tel Aviv, the TA-35 index rose 1.3% yesterday, led by a 2.7% surge in the TA-90, recovering from a 20% drop since early May. The technology and communications sector led gains, boosted by positive sentiment from Wall Street, while financial and defense stocks lagged.

In commodities and currencies, the Israeli shekel weakened against the US dollar, which hit a 14-month high amid global strength. Brent crude oil prices continued a sharp decline, down about 1% to $70.87 per barrel, following a 21% drop in June, the worst since the COVID-19 pandemic began. This drop is partly due to renewed optimism over US-Iran indirect talks in Qatar, despite recent regional tensions. Analysts from ING noted a cautious market outlook, emphasizing a preference for long-term supply chain recovery over short-term disruptions.

US Treasury yields rose, with the 10-year note reaching 4.49%, as investors awaited the June employment report due at 15:30 local time. Forecasts predict a slowdown in job additions to around 114,000-115,000, with unemployment steady at 4.3% and wage growth near pre-pandemic levels. Federal Reserve Chair Kevin Warsh signaled a data-driven approach to interest rates, emphasizing inflation control and independence from political pressures. Bank of America analysts warn a strong jobs report could prompt aggressive rate hikes in 2026.

The aerospace and defense sector experienced significant declines in June, with losses between 20% and 35% for major players like Planet Labs and Voyager. However, Woodbush Investment Bank issued a bullish outlook, viewing the sell-off as a rare buying opportunity driven by temporary political concerns rather than fundamental weaknesses. NASA recently awarded substantial lunar mission contracts, supporting sector growth. Despite volatility, Wall Street analysts see potential for strong rebounds, with SpaceX highlighted as a key infrastructure asset despite recent share price drops.

Overall, the market is navigating a complex environment of sector rotations, geopolitical developments, and macroeconomic data releases, with investors closely watching US labor figures and central bank signals for direction.