Tel Aviv Stocks Open Mixed Amid Global Chip Sector Decline and Await Bank of Israel Rate Decision

The Tel Aviv Stock Exchange (TASE) opened with negative arbitrage gaps in dual-listed chip stocks such as Nova, Camtek, and Tower, reflecting declines in the U.S. semiconductor sector. Despite this, the TASE 35 and TASE 90 indices closed higher yesterday, led by a 3.1% surge in the defense sector index and gains in cleantech and technology sectors. Conversely, the construction, real estate, and banking indices ended slightly lower or with minimal gains. The banking sector remains the weakest performer this year, partly due to interest rate cuts by the Bank of Israel, which is expected to reduce rates by 0.25% next Monday.

Globally, Asian markets showed positive momentum, while Wall Street was closed for the U.S. Independence Day holiday. Recent U.S. labor data revealed weaker-than-expected job growth in June, fueling speculation that the Federal Reserve may cut interest rates later this year. Meanwhile, reports of Apple considering sourcing memory chips from Chinese manufacturer CXMT and AI company Anthropic negotiating with Samsung for a dedicated AI chip have stirred concerns about shifts in semiconductor demand. The Roundhill Memory ETF, tracking memory chip companies, experienced its worst weekly drop of nearly 15%.

In commodities and currency markets, the U.S. dollar strengthened to nearly 3 shekels amid local market weakness and anticipated Israeli rate cuts. Oil prices remain subdued, with Brent crude around $72 per barrel, down roughly 41% since April due to geopolitical easing and falling global demand.

Looking ahead, investors await the Bank of Israel's rate decision and accompanying forecasts, expected to signal continued easing. In the U.S., upcoming releases include purchasing managers’ indices, labor market data, housing figures, and the Federal Open Market Committee meeting minutes, which may clarify future monetary policy.

Despite recent volatility in the aerospace and defense sectors, some Wall Street analysts see current price declines as a buying opportunity, citing stable demand for autonomous weapons systems and government contracts. However, others caution that the space industry may take longer to realize growth than initially anticipated. Overall, market participants remain cautious amid mixed signals and ongoing geopolitical and economic developments.