Global Markets Open Amid Middle East Tensions and Rising Oil Prices
Global financial markets are opening amid escalating security tensions in the Middle East. The Wall Street Journal reports that the US is reinforcing its military presence in the region, deploying combat squadrons and maintaining bomber readiness, with 12 consecutive nights of airstrikes targeting Iran's Revolutionary Guards using B-1 strategic bombers. Concurrently, Yemen's Houthi rebels threaten to expand attacks against Saudi Arabia, claiming recent strikes on two Saudi oil tankers in the Red Sea. These developments have driven Brent crude oil prices to around $96 per barrel, marking over a 20% increase since the start of the month, fueled by heightened US threats and President Donald Trump's warnings of retaliatory strikes on Iranian infrastructure.
In Asia, markets show mixed trends with South Korea's KOSPI surging 3.6%, Hong Kong's Hang Seng rising 1.5%, Tokyo's Nikkei up 0.5%, and Shanghai Composite increasing 0.2%. US futures indicate slight declines, with Nasdaq and S&P 500 futures down about 0.2%. The Tel Aviv Stock Exchange is closed today for the Tisha B'Av fast. Yesterday, the TA-35 index rose 0.8%, led by insurance and oil & gas sectors, while construction and foreign dividend indices declined. Notable stock movements include Gilat leading gains and Nice Systems falling after Morgan Stanley downgraded its rating and price target. Electra Real Estate's shares plunged 18% over two days following a canceled capital raise.
US bond markets reflect rising risk aversion, with Israel's 10-year CDS climbing over 30% since mid-June to 102 points, signaling concerns over renewed conflict with Iran. US Treasury yields have also increased, with the 10-year note reaching 4.66%, the highest since January 2025, and the 30-year yield trading above 5% for the longest period since 2007. Analysts warn of a potential return of "bond vigilantes" demanding fiscal discipline amid heavy corporate debt issuance for AI infrastructure.
Currency markets show the Israeli shekel weakening to around 3.06 per US dollar, its lowest since April, attributed to geopolitical risks and institutional investor behavior ahead of Israel's elections. Oil prices continue to climb sharply following an attack on a Saudi oil tanker and US threats of retaliation. Gold prices remain stable near $1,832 per ounce, with inflation concerns and expectations of US Federal Reserve rate hikes influencing the market. Bitcoin trades slightly lower around $65,572.
On the macroeconomic front, the European Central Bank is expected to keep interest rates steady at 2.25% amid positive economic data and manageable inflation, though geopolitical risks remain a key factor. The US Federal Reserve is anticipated to maintain rates in its upcoming meeting, with market opinions divided on future hikes due to inflation and AI-related economic impacts.
In the tech sector, Hut8's stock has surged 137% this year due to strong demand for data center services, with Cantor raising its price target significantly. Cloud AI provider Nebius has also seen a 142.5% increase in share price, boosted by Nvidia's 9.3% stake and positive analyst recommendations. Tesla reported mixed Q2 results with record deliveries but lower-than-expected earnings per share and negative free cash flow, causing a 4.4% drop in after-hours trading. Other notable corporate news includes layoffs at Monday.com and Amazon's AI division, and Rocket Lab securing a $266 million US Air Force contract for suborbital launches.