Mixed Market Open Expected Amid US-Iran Tensions and Tech Sector Volatility

The Israeli stock market is set to open with a mixed trend on Tuesday, influenced by ongoing US airstrikes against Iran, now in their tenth consecutive day. Dual-listed shares are expected to open with a significant negative arbitrage gap of 0.4%, with chip stocks like Tower Semiconductor, Nova, and Camtek potentially declining up to 1.5%, and pharmaceutical companies Ormat and Teva losing nearly 2%. Conversely, NICE is anticipated to rise by nearly 3%. Asian markets showed recovery this morning, with Tokyo up 2.5%, Seoul over 3%, Shanghai up 0.8%, and Hong Kong slightly down by 0.1%. US futures also rose by up to 0.8%. Yesterday in Tel Aviv, the TA-35 index fell by 0.1%, while TA-90 rose 0.35%, led by a 1.4% jump in the energy infrastructure index and gains in communication and technology sectors. Bank stocks declined 0.7%, dragging the finance index down by 0.5%, though the finance index remains one of the best performers this month with a 7.6% return amid expectations that renewed conflict with Iran may slow interest rate cuts.

Individual stock highlights include Elbit Systems, whose US subsidiary won contracts worth approximately $370 million for border security systems. Brainwave and Ein Sheli showed gains due to US market expansion, with Brainwave investing $3 million in a US clinic network and Ein Sheli securing a $1.45 million drone detection contract. In renewable energy, Solair signed a $38 million solar and storage project in Chile, and Nextcom won its fifth deal this year worth about 56 million shekels. Mega Or led losses in the TA-125 index, dropping over 6% after the Electricity Authority froze approvals for data center connections for 140 days. Mivtach Shamir's subsidiary announced a €200 million investment partnership with Clal Insurance to advance European energy projects. Isracard shares rose over 3% following the cancellation of talks to acquire the digital bank esh.

Wall Street closed lower on Monday amid escalating US-Iran tensions, with the S&P 500 down 0.2%, Dow Jones off 0.6%, and Nasdaq near flat. Defensive sectors like healthcare and consumer staples declined, while technology and communication services gained slightly. Chip stocks showed modest recovery after last week's sharp drop, with ETFs SOXX and DRAM up 0.5% and 0.7%, respectively. AMD announced plans to ship its new AI chip system Helios to customers including Microsoft, aiming to compete with Nvidia's popular AI systems. Intel revealed plans for further layoffs focused on its data center division, having already cut over 5,000 US jobs.

In commodities and currency markets, the shekel weakened 0.5% against the dollar to 3.05 shekels per dollar, pressured by Wall Street declines, Israeli interest rate cuts, and a stronger dollar amid regional security concerns and rising oil prices. Brent crude traded near $89 per barrel and WTI around $82. Oil prices fluctuated after reports of a proposed 10-day ceasefire between the US and Iran, which did not materialize, followed by renewed price increases after President Trump vowed harsh retaliation for any US soldier deaths. Meanwhile, Yemen's Houthi rebels declared a naval blockade against Saudi Arabia, threatening further disruption to oil supply routes.

Economists remain cautious about inflation impacts from renewed US-Iran conflict. Meitav Investment's chief economist Alex Zvezhinski noted that inflation is unlikely to rise significantly unless fighting escalates and disrupts shipping through the Strait of Hormuz long-term. Core US inflation remains stable or declining, real wages are stagnant, and consumer demand is weak, limiting price pressures. Businesses are improving efficiency through technology, raising productivity and offsetting some cost increases.

In corporate news, Amal Holdings, a leading Israeli healthcare and eldercare provider, has seen its stock drop 6.9% since its late 2025 IPO. Market analysts at Leader Capital Markets initiated coverage with a buy recommendation and a 21 shekel target price, citing the company's strong public contracts, stable revenue base, and growth potential. The target price reflects a 19x revenue multiple for 2026, comparable to peers Danal and Tagbur. Amalgamated real estate firm Yespro-Tanufort announced a joint venture with Ari Real Estate to acquire control of G City, with equal ownership and shared decision-making.

Looking ahead, Alphabet (Google) and Tesla are scheduled to report Q2 earnings on Wednesday, followed by Intel on Thursday, with all three results expected to test the resilience of AI-related sectors amid geopolitical uncertainty.