Tel Aviv Stock Exchange Opens Amid Global Uncertainty and Tech Sector Volatility

The Tel Aviv Stock Exchange is set to open amid significant global events, including unprecedented drama at chip giant Nvidia, reports of a potential $3.5 trillion merger between Tesla and SpaceX, and geopolitical developments concerning Iran. Investors will react to Wall Street's high volatility, particularly in the tech sector, and a sharp rise in U.S. Treasury yields, with the 10-year yield surpassing 5%. The local bond market is also expected to feel the pressure.

Dual-listed stocks are providing slight support, with an estimated 0.2% positive arbitrage gap for the TA-35 index. Audiocodes is expected to see a 2.7% positive impact, while Tower Semiconductor and Palo Alto Networks show 1.4% each. Conversely, Nova is returning with a negative 2.35% gap, Ormat Technologies with -1.85%, and Teva with a negligible 0.05% positive gap. The healthcare and biotech sectors also show notable negative arbitrage gaps for Opko Health (-2.4%) and Oramed Pharmaceuticals (-1.5%).

Yesterday, the Tel Aviv market closed mixed. The TA-35 index rose about 0.4%, while the TA-90 index fell 0.2%. The dollar strengthened by nearly 1% against the shekel, trading around 3.2 shekels. The insurance index dropped 2.4% due to Nvidia's stock decline, while the oil and gas index rose 2% following President Trump's remarks on Iran, which boosted global oil prices. The banking index advanced 0.9%.

Individual stock highlights included Next Vision, a drone camera manufacturer, which jumped after reporting a new order worth approximately $7.4 million, bringing its year-to-date order volume to about $252 million. Delta Galil's stock climbed after reporting an 11% revenue increase to $600 million and a 17% net profit growth to $36.6 million for the third quarter. Infrastructure company Y.D. Barzani saw its shares rise about 2% on their first day of public trading.

Asian markets are trading mixed with a downward trend, except for Japan's Nikkei, which is up 0.5%. Hong Kong's Hang Seng index leads the declines, down 1.5%, while Shanghai is down 0.6%. South Korea's Kospi fell 1%. Japan's Finance Minister Satsuki Katayama warned of sharp, one-sided currency movements and pledged cooperation with the U.S. to take appropriate action if necessary, as the yen approached 160 against the dollar.

U.S. futures indicate a negative opening, with Nasdaq futures down 0.2%. Yesterday, Wall Street closed lower, with the Nasdaq down 0.5%, the S&P 500 down 0.4%, and the Dow Jones down 0.3%, influenced by the leadership crisis at Nvidia. Nvidia's stock initially dropped 14% but closed down about 4% after CEO Jensen Huang was reportedly ousted. The U.S. is also investigating Alice Huang for alleged ties to China and potential involvement in smuggling Super Micro products. Super Micro's stock fell 9%. Nvidia's competitors, such as AMD and Broadcom, saw their stocks rise, as did tech giants Amazon, Apple, and Google.

Analysts suggest that the events at Nvidia present opportunities for competitors like Amazon, Google, and AMD, as the demand for AI chips is expected to remain strong. Some strategists believe tech stocks may have bottomed out, while others advise caution and diversification. The potential merger between Tesla and SpaceX, valued at approximately $3.5 trillion, could be the largest in history if approved.

In the Israeli bond market, negative trends continue with rising yields across the curve. Short-term yields saw the most significant pressure, with the one-month yield jumping 18.3 basis points to 3.291%. U.S. Treasury yields also rose sharply, with the 10-year yield exceeding 5% again, driven by inflation concerns and expectations of further Federal Reserve interest rate hikes. This rise in yields is impacting the real economy, as seen in the sharp drop in U.S. existing home sales.

Commodity prices are mixed, with oil prices showing a slight downward trend after significant drops in the past two weeks. WTI crude futures are down about 0.1%, and Brent crude is up 0.5%. The decline is attributed to President Trump's stance on Iran and rising U.S. crude oil inventories.

Macroeconomic data shows a consensus among Fed officials favoring an interest rate hike in December, with some suggesting a 50 basis point increase. The Producer Price Index (PPI) is expected to be released today. U.S. existing home sales in October reached their lowest level in over 16 years, attributed to rising interest rates and inflation concerns.

Market strategists offer varied outlooks on tech stocks, with some predicting a potential surge but cautioning investors. One strategist forecasts the S&P 500 reaching 10,000 points next year, contingent on a resolution of the conflict with Iran, leading to lower inflation and energy prices, and easing pressure on the Federal Reserve.