Global Markets React to Middle East Tensions and AI Growth Ahead of US Earnings Season

Trading on the Tel Aviv Stock Exchange is set to open amid a calm overnight between Iran and the US, following significant progress reported by a US official on implementing the Israel-Lebanon maritime agreement, with the first pilot zone launching soon. Despite renewed Middle East tensions, including Iranian attacks on commercial ships and US retaliations, diplomatic efforts have somewhat eased market fears, stabilizing oil prices which rose earlier due to energy supply concerns.

Asian markets show mostly positive trends, led by Japan’s Nikkei rising 1.4% and South Korea’s Kospi surging 5.2%, driven by strong tech and semiconductor sector gains. Japanese SoftBank shares jumped over 11%, while South Korean chipmakers Samsung SDI and SK Hynix rose significantly ahead of SK Hynix’s US Nasdaq debut. The US futures market shows slight declines, with oil prices up modestly around $76.57 for Brent and $72.31 for WTI per barrel.

In Tel Aviv, dual-listed chip stocks like Tower Semiconductor and Camtek are expected to support the market opening, while Teva Pharmaceutical faces a negative gap. The previous day saw declines in the TA-35 and TA-90 indices amid Middle East escalations, with the shekel strengthening against the dollar. Defense, banking, insurance, real estate, and cleantech sectors closed lower, except technology, which gained due to chip stock recoveries.

US markets favored AI-driven growth over geopolitical risks, with the Nasdaq up 1.2% and chip stocks rallying after Micron Technology announced plans to invest $250 billion in new US fabs. SK Hynix prepares for its Nasdaq listing to raise $29 billion for US expansion, including a $4 billion Indiana plant supported by government incentives. The upcoming US earnings season will feature major banks and chipmakers like TSMC and ASML.

Bond markets showed little change locally, though yields edged higher amid inflation concerns and geopolitical risks. Oil prices climbed over 8.5% since the week’s start due to Middle East tensions, while the shekel remained stable around 3.01 per dollar. Gold prices slightly declined after a recent spike. Bitcoin rose 1.13%, buoyed by positive tech sentiment.

US jobless claims fell to 215,000, indicating labor market resilience and potentially slowing Federal Reserve rate cuts. Manufacturing PMI showed continued expansion with high new orders but persistent inflation pressures. Meanwhile, President Trump expressed disappointment at NATO allies’ unwillingness to support US actions against Iran, hinting at possible troop withdrawals and renewing calls for Greenland’s sovereignty transfer. UBS forecasts European investment opportunities in defense, infrastructure, automation, and decarbonization amid rising geopolitical risks and supply chain diversification.