Recovering from the surge: Oil prices weaken, trading in Asia is trending mixed

Trading review: current reports, trends, indices, stock prices, bonds, currency, commodities, and analyst recommendations.

08:55

Stock Market

Trading on global stock exchanges opened this morning against the backdrop of a sharp escalation in the conflict between the USA and Iran, after the US military carried out extensive strikes overnight against dozens of targets of the Revolutionary Guards in the south of the country. The American move, which came following Iranian launches toward Jordan and direct threats from President Donald Trump, raises the level of alertness in the markets — especially against the backdrop of reports in the 'Wall Street Journal' that Donald Trump is considering expanding military activity to 10 to 14 days of intensive strikes with the goal of eradicating Tehran's missile capabilities. The fear of the expansion of naval fighting in the Strait of Hormuz area and its implications for energy prices and regional stability is expected to continue to weigh on trading on Ahad Ha'am.

In Asia, this morning, trading is taking place in a mixed trend with a tendency toward price declines: the Nikkei index in Japan stands out positively and is climbing by 0.8%, while the rest of the leading indices in the region are trading in negative territory. The declines are led by the Shanghai index in China and the KOSPI index in South Korea, which are falling by about 0.7% and about 1% respectively. In the rest of the markets, a more moderate trend is recorded, with the Hang Seng in Hong Kong trading around the baseline and falling by about 0.1%.

Shares of the data transmission optical component manufacturer, Zhongji Innolight, are recording a decline of about 5% this morning on their first day of trading on the Hong Kong Stock Exchange, after completing its initial public offering (IPO) with a fundraising valuation of 6.8 billion dollars. This is the second-largest IPO in Asia since the beginning of the year, in which shares were priced at 980 Hong Kong dollars per share. The company is considered a key supplier of components for data centers in the field of artificial intelligence (AI), cloud computing, and high-speed data communication.

Samsung shares are climbing this morning by about 1.6% on the Seoul Stock Exchange, after the South Korean technology powerhouse reported a quarterly operating profit that beat market forecasts against the backdrop of the surge in demand for AI components. The company presented a record amount in operating profit for the second quarter — an impressive jump of 1,814% compared to the same quarter last year and an increase of over 56% compared to the previous quarter. The Korean giant's revenues surged by 130% year-on-year.

Futures on Wall Street indicate slight price increases this morning, led by NASDAQ futures which are climbing by 0.4%, while S&P 500 futures are rising by 0.3% and Dow Jones futures are adding 0.1%.

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Wall Street and Corporate Earnings

On Wall Street, at the end of a volatile evening, the major indices recorded declines yesterday, as investors were forced to digest three negative factors: a hawkish message from the Federal Reserve, a surge in oil prices following the escalation with Iran, and continued weakness in chip stocks against the backdrop of concerns surrounding huge investments in AI.

The Dow Jones index plummeted by 2.1% — the sharpest daily decline since April 2025. The S&P 500 index fell by 1%, and the NASDAQ weakened by 1.2%. The main trigger was the Fed's decision to leave the interest rate unchanged, but three committee members voted in favor of a hike — more than the market expected.

Israeli companies on Wall Street:

• Teva surged following the reports and the raising of forecasts. The market is encouraged by the fact that Teva is updating its revenue forecast for 2026 upward to the range of 16.5-16.85 billion dollars.

• Lemonade shares plummeted despite beating forecasts. The forecast it provided for the rest of the year disappointed investors.

• Fiverr results for the second quarter of 2026 were in line with the forecast range that the company had provided in the past, but slightly lower than the analysts' forecasts.

• Silicom shares rose by a double-digit percentage after beating forecasts in the second-quarter reports.

Technology giant Meta published its financial results for the second quarter of 2026 last night, and presented a mixed picture that sent the stock to a fall of about 7% in after-hours trading. While the company's revenues met expectations and amounted to 60.8 billion dollars, the earnings per share disappointed sharply and stood at only 6.18 dollars. The Reality Labs division recorded a heavy operating loss of 4.62 billion dollars, and at the same time, Meta updated the floor of its capital expenditure forecast upward to 130 billion dollars this year.

Unlike Meta, technology giant Microsoft presented strong reports last night that sent the stock to gains in after-hours trading. The company beat analysts' forecasts from end to end, with quarterly revenues of 90 billion dollars and earnings per share of 4.74 dollars. The main buzz around the report came from the Azure cloud arm, which recorded impressive growth of 43% for the quarter, above expectations, and crossed the 100 billion dollar threshold in annual revenues for the first time.

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Debt, Commodities, and Macro

The US government bond market is recording sharp fluctuations following the Federal Reserve's decision to leave the interest rate unchanged in the range of 3.5%-3.75%. The yield of the 30-year bond surged to 5.201%, while the yield for 10 years climbed to 4.671%.

Oil prices retreated slightly this morning. A barrel of Brent type is falling by 1.04% to a level of 89.80 dollars, while the price of a barrel of American oil (WTI) is weakening by 0.83% and is trading at 83.76 dollars.

Gold prices are showing slight increases and are trading at a level of about 4,047 dollars per ounce, as investors re-evaluate the messages of Fed Chairman Kevin Warsh regarding the fight against inflation.

The Federal Reserve announced yesterday its decision to leave the interest rate in the USA unchanged at the level of 3.75%. In the press conference after the announcement, Federal Reserve Chairman Kevin Warsh adopted a hawkish message and clarified that the central bank "will not hesitate to act" if it becomes necessary. Warsh emphasized that the 2% inflation target is not flexible.