Mixed Market Open Expected Amid US-Iran Tensions and Rising Oil Prices

The stock market is set to open with mixed trends amid escalating US-Iran tensions and recent attacks in the Gulf region. The US Central Command reported a five-hour wave of strikes targeting Iranian defense systems, missile sites, drones, and naval capabilities. Dual-listed shares are expected to weigh on trading with a negative arbitrage gap of about 0.4%. Semiconductor stocks Tower and Nova are projected to fall by approximately 2.2% and 1.7%, respectively, following weakness on Wall Street. Teva and Enlight are also expected to decline by around 1.2% and 0.9%. Asian markets show slight gains, with Tokyo up 0.5% and Seoul rising 0.8%, while US futures indicate modest increases.

Yesterday in Tel Aviv, trading closed mixed after sharp intraday declines, with the TA-35 index briefly dipping below 4,000 points before ending up 0.1%. The market reacted to the renewed US naval blockade on Iran announced by President Trump, who stated the US will act as "protector of the Strait of Hormuz" and impose a 20% fee on Iranian shipments passing through. The blockade is set to begin at 23:00 today. Sector-wise, security and construction indices fell about 1.3% and 1.1%, while oil and gas stocks surged 2.4% amid rising crude prices. Notable stock movements included a rebound in Tower shares by over 4% and declines in Opko Health and Next Vision.

In banking news, Discount Bank is initiating a merger with Mercantile Bank to improve operational efficiency, potentially leading to hundreds of job cuts and branch closures. Discount Investments also announced a restructuring plan to reduce costs and unlock shareholder value, subject to approvals. Renewable energy company Solair saw its shares jump after announcing a long-term lease in northern Chile to develop AI data centers powered by renewable energy.

On Wall Street, major indices closed lower due to geopolitical tensions and soaring oil prices. The Nasdaq dropped 1.5%, led by a sharp selloff in semiconductor stocks, including SK Hynix, Nvidia, AMD, and Intel. The DRAM sector ETF fell nearly 10%. US bank stocks declined ahead of quarterly earnings reports starting today. Conversely, oil producers like Chevron and ExxonMobil gained. SpaceX shares fell to $139, near their IPO price, wiping out over a trillion dollars in market value since June. Analysts attribute this to a normalization after initial hype.

In bond markets, Israeli government and corporate bonds saw moderate declines, with yields rising slightly. US Treasury yields increased notably, with the 10-year yield reaching 4.61% and the 2-year yield hitting its highest since February 2025, reflecting heightened risk and anticipation of the US consumer price index (CPI) release today.

Currency markets reacted to the Middle East tensions as the Israeli shekel weakened about 0.8% against the dollar, which strengthened globally amid demand for safe assets. Brent crude oil prices surged over 9% yesterday to around $83 per barrel, marking the largest daily gain in six years, and continued rising today. Gold prices fell over 2% due to the stronger dollar but showed slight recovery this morning. Bitcoin dropped about 3% amid risk-off sentiment.

The US CPI report for June, due at 15:30 Israel time, is expected to show a 0.1% decline, lowering annual inflation below 4%, but core inflation is forecast to rise 0.3%, maintaining pressure on the Federal Reserve. Fed officials, including Christopher Waller, have indicated that a higher-than-expected inflation reading could prompt interest rate hikes soon. Fed Chair Kevin Warsh will testify before Congress today, an event closely watched by markets.

Apple shares reached an all-time high after Citi raised its price target from $315 to $365, citing the company’s ability to raise prices selectively and maintain demand despite a slowing smartphone and PC market. The upcoming iPhone 18 launch in September and a foldable phone expected in Q4 are seen as positive catalysts. Apple’s market cap stands at about $4.66 trillion, second only to Nvidia. Proxibit also expanded operations after receiving a permanent license.

Overall, markets remain volatile amid geopolitical risks, rising energy prices, and anticipation of key economic data and corporate earnings.