Tel Aviv Stock Exchange Opens Higher Amid US Inflation Drop and Tech Gains

The Tel Aviv Stock Exchange (TASE) is expected to open with positive momentum following two key macroeconomic indicators. The first, already published, showed a decline in US inflation, sparking global market gains. The second, due to be released later today, is anticipated to show a further drop in Israel's consumer price index, increasing the likelihood that the Bank of Israel will continue cutting interest rates, a positive signal for local investors.

Asian markets are rising this morning, led by South Korea's 5% surge driven by chipmakers SK Hynix and Samsung, while US futures also point to gains after Wall Street's rally, particularly in technology and finance sectors. The Israeli shekel strengthened below the 3-shekel threshold against the dollar. Despite ongoing geopolitical tensions between the US and Iran and rising oil prices, the market appears to be absorbing these risks.

Dual-listed stocks such as Tower Semiconductor and Camtek are expected to rise, while Elbit Systems may decline slightly. IBM's stock plummeted 25% after issuing a second-quarter earnings warning, which could impact Israeli tech and hardware shares. On TASE, the TA-35 index closed up 0.7%, TA-90 fell 0.3%, and the TA Technology index rose 2.4%. Energy infrastructure and cleantech sectors also gained, while biomed and banking indices declined.

In bond markets, US yields rose amid inflation and geopolitical concerns, while Israeli bond indices showed mixed performance. Moody's highlighted Israel's strong macroeconomic data, with inflation expected to fall to around 1.5%, the lowest in five years, keeping the country within the Bank of Israel's target range. However, credit conditions are tightening for real estate and small businesses due to rising risks.

Oil prices surged to $86 per barrel for Brent crude following US military actions near the Strait of Hormuz, though prices later stabilized after President Trump retracted plans for a transit fee. The shekel's strength continues, supported by positive US market trends and inflation data.

Investment bank Jefferies reiterated a buy recommendation for Israeli defense firm Next Vision, projecting 86% revenue growth this year and a target price 68% above current levels. The company is well-positioned for mergers and acquisitions with $524 million in cash reserves.

Overall, the market is cautiously optimistic, balancing strong economic data and corporate earnings against geopolitical risks and commodity price volatility.