Tel Aviv Stock Exchange Opens Amid Global Market Optimism and Key Corporate Developments
The Tel Aviv Stock Exchange (TASE) opened with hopes to continue the positive momentum from last week, influenced by global market trends and geopolitical developments. The recent decision by former U.S. President Donald Trump not to attack Iran has contributed to optimism, aligning with rising futures in Wall Street and falling oil prices. Asian markets showed mixed trends, with South Korea's stock exchange declining due to semiconductor stocks, while the Japanese yen strengthened following coordinated intervention by Japan and the U.S. to support the currency.
Notable stocks to watch include potential shifts in the short-lived business relationship between Ari Real Estate and G City, with legal inquiries underway. A control battle is unfolding at Novolog Health Services between major shareholder Ehud Pozis and Eli Dahan of Movement, who is proposing a 100 million shekel investment for a 21% stake. Nofar Energy faces a credit rating review by Midroog due to recent corporate transactions. Additionally, cybersecurity giant Palo Alto Networks will join TASE's leading indices, TA-35 and TA-125, marking a significant milestone six months after its dual listing.
The upcoming earnings season in Tel Aviv is expected to accelerate, with reports from the Stock Exchange, Tower Semiconductor, Nova, Ormat, El Al, Nice, Bezeq, and ICL scheduled throughout the week. Market expert commentary highlights two main factors shaping TASE's direction: a 2% rise in the TA-35 index in July led by banks and energy sectors, and the impact of global tech sector recovery.
In the U.S., Wall Street closed higher last Friday, driven by strong Amazon earnings, particularly from its AWS cloud division, which saw a 37% revenue increase. However, Apple shares dropped sharply after a disappointing forecast. The week ahead will feature key earnings from AI-focused companies like Palantir, ON Semiconductor, AMD, Sandisk, and Western Digital, alongside major pharmaceutical firms Eli Lilly and Novo Nordisk, and Disney. U.S. labor market reports, including JOLTS, ADP private employment, weekly jobless claims, and the crucial monthly employment report, will be closely monitored for signals on Federal Reserve policy.
In bond markets, ambiguous statements from Fed Chair Kevin Warsh have pushed long-term U.S. Treasury yields to multi-year highs, with the 10-year yield at 4.65% and the 30-year at 5.21%, the highest since 2007. Concerns about Fed policy and Japan's currency interventions, which may involve selling U.S. debt, have added pressure. The complexity of global debt levels, inflation, and central bank balance sheet reductions require investors to demand higher risk premiums for long-term bonds.
Currency markets saw the Israeli shekel weaken by 2.6% against the dollar in July but strengthen slightly this morning. Institutional investors increased foreign currency sales, while businesses bought more foreign currency. The Bank of Israel purchased $1.8 billion. The Japanese yen surged following unprecedented coordinated intervention by Japan and the U.S. to halt its decline, with the yen rising to 156.5 per dollar, its strongest since May. Analysts expect further interventions if the yen weakens again.
Finally, Bank of America analysts offer a contrasting view on Meta and Apple. Meta's recent earnings miss, driven by one-time expenses and heavy AI investments, led to a stock drop, but the bank sees early signs of AI boosting core business metrics and values Meta's infrastructure investments highly, maintaining a buy rating with a $810 target price. For Apple, the cautious revenue forecast is attributed to supply constraints, not demand weakness, with strong iPhone sales and service growth. Apple is also expected to benefit from AI enhancements in its services division.