Israeli Stock Market Reopens Amid US-Iran Tensions and Tech Sector Volatility

The Tel Aviv Stock Exchange resumes trading this morning after a one-day break for Tisha B'Av, with investors cautious amid escalating US-Iran tensions. Overnight, the US launched strikes in Iran, which responded with threats against Tel Aviv, contributing to global market declines. Asian markets fell sharply, including a nearly 3% drop in Tokyo and a 5% plunge in South Korea, while US futures remained stable ahead of Intel's better-than-expected quarterly report. Dual-listed Israeli tech stocks showed mixed arbitrage gaps, with Tower Semiconductor rising about 5% and Elbit Systems up 1.5%, contrasting with declines in Camtek, Nova, Teva, and others. The possibility of Saudi Arabia joining the Abraham Accords, following a conditional US nuclear deal announcement by President Donald Trump, could influence local market sentiment.

In the US, major indices fell sharply, with the S&P 500 down 1.4% and Nasdaq 2%, pressured by rising oil prices above $100 per barrel and disappointing tech earnings from Alphabet and Tesla. The "Magnificent Seven" tech giants lost around $900 billion in market value. Defense stocks Lockheed Martin and RTX surged on strong order backlogs. Intel reported $16.1 billion in revenue, beating expectations and providing a strong outlook. Israeli companies on Wall Street saw mixed results: Mobileye's shares dropped after founder Amnon Shashua announced his departure, despite improved profitability and raised 2026 forecasts; Novocure shares rose 16% after beating revenue estimates.

US Treasury yields hit 18-month highs amid inflation fears fueled by rising energy costs. The 10-year yield climbed to 4.7%, reflecting concerns that higher oil prices could delay Federal Reserve rate cuts. The dollar strengthened against most currencies, including the Israeli shekel, which weakened over 9% since May. The Japanese yen fell to a four-decade low against the dollar due to energy import costs and interest rate differentials.

The European Central Bank kept interest rates steady at 2.25%, signaling a wait-and-see approach on inflation and growth. Upcoming key macroeconomic data include US Q2 GDP and core PCE inflation, Israeli labor and credit card spending figures, and European consumer price indices. Meanwhile, semiconductor equipment firms Nova and Camtek have seen their stock prices fall sharply, though Bank of America analysts remain optimistic about their growth potential and have set price targets reflecting significant premiums.

Overall, the reopening of the Israeli market occurs amid geopolitical uncertainty, volatile tech sector performance, and inflationary pressures impacting global financial markets and currencies.