Markets Await US Inflation Data and Nvidia Earnings Amid Mixed Asian Trading

Global markets opened cautiously as investors awaited two key events: the US inflation report and Nvidia's quarterly earnings, scheduled after the US market close. Asian markets showed mixed performance, with Japan's Nikkei 225 down 0.25% and South Korea's Kospi falling 0.3%, while Hong Kong's Hang Seng and China's Shanghai Composite rose about 0.5%. Alibaba shares gained nearly 3% in Hong Kong following insider stock purchases.

US futures edged slightly lower, reflecting investor anticipation for Nvidia's report. Analysts, including Uzi Levy from Mizrahi Tefahot, noted that a strong report might not suffice; the market seeks a significant positive surprise to confirm Nvidia's exceptional growth pace. Earlier, the US personal consumption expenditures (PCE) inflation index for July, favored by the Federal Reserve, was expected to show a 0.1% monthly rise and a 3.6% annual increase, slightly down from June. This data is critical as US Treasury yields recently hit multi-year highs but declined yesterday.

Wall Street ended a losing streak with the Dow Jones up 0.2%, S&P 500 up 0.3%, and Nasdaq gaining 0.5%, led by semiconductor stocks. The dollar's weakness boosted gold prices by 16% since the start of the month, supported by weaker US economic data and increased US Treasury market intervention. Copper prices also surged due to US tariff threats causing stockpiling, creating shortages outside the US.

In Tel Aviv, investors hoped to continue the positive momentum from the previous day, when the TA-35 rose 0.4% and TA-90 gained 0.7%, led by strong insurance sector earnings. Dual-listed stocks were expected to remain stable, with Palo Alto Networks down 2% ahead of its earnings next Tuesday, though JP Morgan raised its price target to $384 by December 2027. Other Israeli tech stocks like Teva, Tower Semiconductor, Camtek, and ICL showed about 1% gains.

UBS highlighted growing market fragility ahead of the Federal Reserve's September rate decision and the US midterm elections in November. Their "Turbulence Index" reached its maximum level for the first time in two years, signaling increased vulnerability. This is supported by rising VIX futures prices, indicating traders are paying more for volatility protection during the election period. Historically, market volatility tends to rise significantly in midterm election years, especially when the same party controls both the White House and Congress.