Tech and AI Drive Positive Momentum in Israeli and Global Markets Amid Mixed Economic Signals
The Israeli stock market is set to open positively, buoyed by strong gains in Asian markets and a favorable sentiment from Wall Street, particularly in technology and artificial intelligence sectors. Dual-listed stocks on the Tel Aviv Stock Exchange show a weighted arbitrage gap of 0.63% above the TA-35 index, with chip and tech companies like Brainway, Camtek, Gilat, and Palo Alto leading gains. Conversely, some tech stocks such as Ormat Technologies and Tower are down. South Korea's Kospi index surged 3.7%, entering bull market territory, driven by semiconductor giants Samsung Electronics and SK Hynix, reflecting renewed AI investment optimism. In the US, futures markets are mixed but stable, with Nasdaq futures slightly up.
Israeli banks reported strong quarterly results, with Bank Leumi's net profit rising 8.5% to a record 2.83 billion shekels and Discount Bank posting a 7.9% profit increase alongside AI-driven efficiency plans including workforce reductions. The construction sector index fell 2.4%, marking its worst month since March 2025 amid rising cancellations of new home purchases. OPC Energy shares jumped over 10% following robust Q2 earnings, while Multi Retail surged nearly 38% after a major ownership sale.
US Treasury yields are rising, with the 30-year bond hitting 5.28%, the highest since 2007, driven by large government deficits, heavy tech sector debt issuance, and declining foreign demand. This trend raises concerns about credit costs and economic growth. Analysts warn that these pressures could negatively impact equity markets.
In currency and commodities, the Israeli shekel remains resilient against the US dollar despite global uncertainties, trading near 3 shekels per dollar. Oil prices eased slightly after five days of gains amid supply disruption fears in the Gulf of Oman and the Strait of Hormuz. Gold prices surged over 1% to a two-month high, supported by a weaker dollar and US inflation data aligning with expectations.
US July inflation data showed a modest 0.1% monthly increase, lowering the annual rate to 3.4%, the lowest in three months, with core inflation steady at 2.5%. However, underlying pressures persist, especially in services and energy sectors. Economists suggest the Federal Reserve may hold rates steady in September but warn of possible hikes later due to structural inflationary forces.
SpaceX shares soared after a 35% weekly rise, closing near $146 amid CEO Elon Musk's strategic pivot toward AI infrastructure. Musk announced plans for a $16.8 billion AI data center in Texas and acquisitions to compete with major AI firms. Morgan Stanley analysts maintain an overweight rating with a $300 target price, citing potential for significant growth if SpaceX expands AI data centers and Starlink services. However, some analysts caution about high cash burn and revenue risks tied to AI investments.
Overall, markets are energized by AI and tech sector growth, but face challenges from inflation dynamics, bond market volatility, and geopolitical risks affecting commodities and currencies.