Five Things to Know Before the Market Opens
Tel Aviv trading is set to open amid falling oil prices and a Saudi maritime security initiative. Asian markets are rising, led by the KOSPI and chip stocks. Wall Street saw a 17% surge in Microsoft and a chip rally. Tech giants reported: Amazon jumped 8%, while Apple fell in after-hours trading. The Bank of Japan kept interest rates unchanged. Ed Yardeni: "The Dow theory remains bullish." Globes summarizes the day ahead.
Trading Review: current reports, trends, indices, stock prices, bonds, currency, commodities, and analyst recommendations.
1. Stock Markets
The trading day in Tel Aviv is expected to open against the backdrop of the Iranian attack on American bases in Kuwait, and alongside the announcement by US President Donald Trump, who declared last night (Friday) that the Peace Council in the Gaza Strip "has reached a historic deal to dismantle Hamas and the other armed groups in the Strip of their weapons." Against the backdrop of the Iranian attack, oil prices continue to fall this morning, as signs of recovery in crude oil flow through the Strait of Hormuz have reduced concerns about supply disruptions. In a review published on Friday by the Reserve Bank of Australia, it was noted that the strengthening of oil traffic in the Strait of Hormuz has calmed market concerns after the mutual attacks between the US and Iran earlier this week briefly pushed the price of Brent above $93 per barrel. The bank estimates that the traffic currently recorded in the critical shipping artery has recovered to about 30%-60% of pre-war levels, and notes that a return to a flow volume of about 50%-60% of normal levels may be enough to return the situation of excess supply to the global crude oil market.
Dual-listed stocks will return to trading in Tel Aviv with a positive weighted arbitrage gap of about 0.28% in the TA-35 index, following a positive contribution of 0.68% recorded last night at the close of trading in New York. The positive trend is led by Teva, which returns with a positive gap of 1.26%, Nice (+1.84%), Elbit Systems (+0.46%), and ICL (+0.73%), alongside gains in stocks such as Palo Alto (+2.62%) and InterCure (+2.12%). On the other hand, negative gaps are recorded, among others, in Tower (-0.42%), Nova (-0.68%), and Camtek (-1.00%), which somewhat moderate the overall contribution of dual-listed stocks to the leading indices.
Trading in Asia is conducted in a mixed trend with a tendency for sharp gains, led by an exceptional jump of about 15.2% in the South Korean KOSPI index, led by SK Hynix stock, which is jumping by more than 25%, and Samsung stock, which is jumping by more than 20% following the recovery of the artificial intelligence sector. In Tokyo, the Nikkei index also shows an impressive rally and jumps by 4.1%. In China, more moderate gains are recorded, with the Shanghai index adding 0.8%; on the other hand, the Hang Seng index in Hong Kong shows a slight decline of 0.1%. Futures on Wall Street are trading with price increases, with the Nasdaq jumping by 1.1%, and the S&P 500 and Dow Jones adding about 0.5% each.
Yesterday in Tel Aviv, the stock exchange closed the trading day in a mixed trend. While at the beginning of the day declines were recorded, among other things, against the backdrop of the plunge recorded on Wall Street and another wave of American attacks in Iran, subsequently most of them were erased in view of the recovery recorded in stock exchanges around the world. At the same time, the shekel weakened at the beginning of the day, but towards the close it strengthened against the dollar by about 0.7% and its continuous rate stood at 3.05 shekels. The TA-35 index climbed by about 1.2%, while the TA-90 index weakened by 0.2%. The gains were led by the banking and insurance indices, which climbed by 2.2% and 1.6% respectively. On the other hand, the declines were led by the construction index and the TA-Income Overseas index, with declines of about 0.6% and 0.75% respectively.
Dual-listed chip stocks Tower, Nova, and Camtek erased declines recorded at the beginning of the trading day and finished the day in the green, in view of a significant recovery recorded in the chip sector on Wall Street. On the other hand, among the stocks that led the declines in the TA-125 index: Opko Health (which jumped earlier this week by an exceptional rate of 33% after the reports), Nice, Electra Real Estate, Veridis, and Nayax. Another stock that attracted interest is BZA, which fell after the Concentration Committee recommended not to approve Shapir Engineering to acquire the company. Members of the Concentration Committee recommended against the acquisition, arguing that it would increase concentration too much, because BZA itself is a concentrated factor controlling about 40% of the fuel and LPG (cooking gas) supply in Israel.
The reporting season for the second quarter of 2026 continues, and a long line of companies trading on Wall Street will publish reports next week. One of the reporters will be Elon Musk's space giant, SpaceX, in its first reports as a public company. Other companies that will publish reports are the AI company Palantir, the pharmaceutical company Eli Lilly, the memory component company SanDisk, and the fast-food chain McDonald's. Israeli companies that will publish reports are the chip manufacturer Tower, the internet company Wix, and the chip equipment company Nova.
Last night on Wall Street, the stock exchanges closed with sharp gains, after investors took advantage of the recent declines to return to technology and chip stocks, against the backdrop of estimates that the wave of investments in artificial intelligence is still far from over. The Nasdaq climbed by 2.5%, the S&P 500 by 1.5%, and the Dow Jones by 1%. The chip stock index (SOXX) jumped by about 8% after the sharp realizations recorded in recent days in one of the most crowded trades on Wall Street. Despite the sharp jump recorded today in chip stocks, the sector is still on its way to complete a monthly decline of about 21% in July - a move that may be the sharpest since 2008.
Microsoft stock jumped by about 17% and added about $480 billion to its market value in one day - the largest addition ever recorded for an American company, according to Dow Jones Market Data. Microsoft's performance is particularly prominent against the backdrop of the sharp decline in Meta Platforms (Facebook) stock, which lost about 9% after it provided a disappointing revenue forecast and presented a sharp drop in free cash flow. It is on its way to record 11 consecutive days of declines - the longest streak of declines in its history. During the period, the stock lost more than 20% of its value. Also, stocks that were among the main holdings of the hedge fund Situational Awareness, which was recently forced to sell some of its leveraged positions to Citadel following the crisis in AI stocks, recorded a sharp recovery. Among them are memory chip manufacturers such as SK Hynix and SanDisk, fuel cell manufacturer Bloom Energy, and cloud service provider Nevius Group.
"Despite the volatility in the short term, the outlook for US stocks remains positive, thanks to strong company profits, continued adoption of AI technologies, a resilient economy, and supporting financial conditions," said Samir Samana, head of the equity and real assets department at Wells Fargo.
Yesterday, Apple and Amazon published their reports. Apple beat analyst forecasts for the third fiscal quarter with revenues of $109.4 billion and a profit of $2.02 per share, benefiting from a 21% jump in iPhone sales ($54.25 billion). However, the stock is falling by about 4% in after-hours trading - this is despite the fact that this week it briefly broke a market value of $5 trillion. The pressure in after-hours trading comes against the backdrop of a slight miss in iPad and services revenues, the lack of an official forecast, and the company's struggle with a severe global shortage of memory chips that may even make the prices of the next iPhone more expensive. This is Tim Cook's last report as Apple CEO, just before the expected launch in September of the upgraded AI-based Siri.
Amazon beat market forecasts for the second quarter of 2026 by a huge margin, which sent the stock to a jump of about 8% in after-hours trading. The company reported revenues of $200 billion (above the expectation of $196.4 billion) and crushed the profit forecast with $5.75 per share - almost three times the analyst forecasts. The main growth engine was the cloud division (AWS), whose revenues jumped by 37% to $42.3 billion, among other things thanks to heavy demand from companies like OpenAI and Anthropic and the expansion of the company's chip field. Alongside the strong results, Amazon announced its intention to invest about $200 billion in capital expenditures this year, mainly in AI infrastructure, when investors' attention is turned to CEO Andy Jassy's conference call regarding the return on investment and the progress of AI model development in the company.
2. Bond Markets
After the Fed left the interest rate unchanged, the reaction in the bond market was mixed: a rise in yields on 30-year bonds and a decrease in yields on short-term bonds. The yields of US government bonds for 30 years rose to a 19-year high. This is also against the backdrop of the renewal of American attacks in Iran. Bloomberg noted that the jump in yields on long-term bonds may indicate a lack of confidence in the market. Yields for short terms traded with slight increases, led by the yield for a year which rose by 0.45% to a level of 4.04% and the yield for two years which added 0.09% to 4.23%. On the other hand, in the medium and long terms, a decrease in yields (a rise in bond prices) was recorded: the yield for 10-year bonds decreased by 0.34% to a level of 4.65%, and the yield for 30 years weakened by 0.36% to 5.19%.
In the local market, the stock exchange added liquidity conditions for inclusion in the Tel-Bond indices for the first time. Bond series that do not meet the new liquidity conditions will be removed from the bond indices in the upcoming update in August - about 1.6% of the value of assets in the indices. According to the stock exchange, among the series that may be deleted are also certain series of Bank Leumi, Gazit-Globe, Israel Discount Bank, and more, but companies can take steps to improve liquidity such as appointing a market maker until the determining date.
3. Commodity and Currency Markets
In the local foreign exchange market, the shekel opened the past day with weakening against the dollar, in the face of the American attacks in Iran and the plunge recorded on Wall Street on Wednesday evening; however, in view of the sharp gains on Wall Street, it moved to strengthen by about 0.7% against the American currency and its continuous rate stood at just below the 3.06 shekel threshold.
In the global foreign exchange market, drama was recorded on the Japanese yen front, which for no clear reason suddenly strengthened against the dollar by over 2% - a strengthening that sparked speculation among analysts that the authorities in Japan intervened in the foreign exchange market to support the local currency. This is the sharpest daily rise of the yen since April, and this is after a period in which the Japanese currency weakened to its lowest levels in four decades. The weakening of the yen was mainly due to the large interest rate gaps between Japan and the US, when the Federal Reserve maintained a high interest rate while the Bank of Japan progressed slowly in the process of raising the interest rate. A sudden strengthening of the yen, without a clear economic factor, increased estimates that the Japanese Ministry of Finance may act again in the foreign exchange market - as it did in the past with the aim of stopping sharp declines in the currency. However, the authorities in Japan tend not to confirm or deny intervention actions immediately. The sharp move came on the eve of the interest rate decision of the Bank of Japan, which decided to leave the interest rate as it is at the level of one percent, in accordance with forecasts. For global markets, a rapid strengthening of the yen may be significant even beyond Japan, as many investors financed investments in various assets through loans in yen with a low interest rate - a strategy called Carry Trade. A sharp rise in the Japanese currency could cause the closing of such positions and increase volatility in the markets.
The price of oil traded yesterday with stability after volatility in recent days (and a rise on a monthly level), as investors try to understand what the direction is in the fighting in the Middle East. In Yahoo Finance, a KCM Trade analyst, Tim Waterer, was quoted as saying: "Until the passage through the Strait of Hormuz is not a gamble, the risk premium in oil is not going anywhere." This morning, oil prices continue to fall. WTI oil is plunging by 2.23% to a price of $81.73 per barrel. At the same time, Brent oil weakened by 1.75% and is trading at a level of $87.47 per barrel. Also in the commodity market, the investment bank Cantor notes the increase in demand for copper, alongside a shortage in supply. The bank estimates that following the continued investments in increasing electricity production, electric vehicles, renewable energy, and AI infrastructure, the demand for copper will only grow, and after 2030 the gap between demand and supply will intensify. The establishment of new copper mines requires, according to them, huge investments, and they estimate that to justify establishment, the price of copper needs to rise.
4. Macro
The economic data published yesterday in the US pointed to a mixed picture in the American economy. The first estimate for real GDP growth in the second quarter showed that the economy grew at an annual rate of 1.5%, lower than the economists' forecasts which stood at 1.8%. The PCE price index lost 0.1% in June, in accordance with the consensus of expectations; annual inflation now stands at 3.7% - very far from the Fed's target. At the same time, the core PCE index - the inflation index preferred by the Federal Reserve - rose in June by 3.3% in annual calculation, in accordance with market expectations. It was also published that the number of initial claims for unemployment benefits amounted in the week ending July 25 to 197 thousand, an increase of 9,000 compared to the revised figure of the previous week.
According to Yoni Fanning, chief strategist at Mizrahi-Tefahot Bank, "the lack of a stronger correction in inflation this time can be attributed to the effects of tariffs, in addition to the mentioned World Cup. But even if not for reasons internal to the economy, and certainly not monetary, it is very far from the Fed's inflation target. And as we saw yesterday, even if the central bank chooses not to raise the interest rate in the current reality, it is already enough to challenge the monetary credibility as a whole, external reasons or not, and push the long-term yields upward."
The Bank of Japan left the interest rate unchanged, but signaled a willingness to accelerate the pace of interest rate hikes in the future - when senior officials in the bank are open to more frequent moves than the current forecast in the market, which stood at one hike every six months. In the policy announcement, the bank noted that since core inflation is approaching the 2% target and financial conditions remain expansive, it will continue with interest rate hikes to prevent an upward deviation from the target inflation. In light of this, analysts in the market note that an interest rate hike as early as September or October has become a reasonable possibility. Attention is now turned to the press conference of Governor Kazuo Ueda; as noted by Wataru Aso, a product expert at RBC BlueBay Asset Management: "The more important question is whether Governor Ueda and the bank will signal an acceleration of the pace of future hikes. This is the focus of the meeting, and his press conference will be the place where the markets will look for answers."
Among the macro data that will be published next week in Israel, one can note the average gross salary for an employee and service exports for May. In the US, the purchasing managers' index for July, the employment report (JOLTS) for June, and the unemployment rate for July will be published. In Switzerland, the consumer price index will be published, in China the trade balance and consumer price index, in the UK data from the real estate market, and in the Eurozone the purchasing managers' index.
5. Forecast
While artificial intelligence has become the focus of the growth story in the markets in the last year, veteran strategist Ed Yardeni chose in one of his recent reviews to shine a spotlight on a theory developed more than a hundred years ago, which suggests that the bull market has room to continue climbing. "The Dow theory remains bullish," Yardeni wrote in his review.
On the Benzinga website, they noted that the Dow theory goes back to the American journalist Charles Dow (after whom the Dow Jones index is named), who argued that a healthy bull market requires confirmation from two different corners of the economy: industrial companies must produce goods, and transport and logistics companies must transport them. According to the theory, if both the Dow Jones Industrial Average and the Dow Jones Transportation Average reach new highs together, the market signals that economic activity is expanding broadly, and not driven by speculation alone. And this is exactly what Yardeni noted in his review. "The Dow Jones Industrial Average and the Dow Jones Transportation Average remain in the all-time high zone," he said.
Yardeni pointed out that the transport sector indirectly benefits from the AI expansion race, when every new data center requires huge amounts of steel, concrete, electrical equipment, transformers, and cooling systems. "The recovery in railway companies coincides with the construction boom of data centers... the railways transport the materials and equipment required for building the data centers," he said. The IYT ETF, which tracks the Dow Jones Transportation Average (iShares Transportation ETF), has risen by about 13% since the beginning of the year and significantly outperforms the return of the S&P 500, which has climbed so far in this period by over 8%.
