Tailwind from Wall Street: Chip giants boost Asian stock exchanges

Trading review: current reports, trends, indices, stock prices, bonds, currency, commodities, and analyst recommendations. 6:55. Cautious optimism is recorded in the markets against the backdrop of the US Treasury's announcement on doubling the volume of buybacks of long-term bonds to 4 billion dollars. The move led to a jump in bond prices and a drop in yields, led by the 30-year yield which experienced its sharpest decline since October 2025. The retreat in yields interrupted a streak of declines in US stock indices and provided sharp jumps in the crypto market. However, the positive sentiment comes with concerns against the backdrop of the economic campaign against Iran. President Trump threatened harsh financial sanctions on countries that will assist Tehran, clarified that the US is conducting against it the "most destructive economic operation in history," and demanded to immediately block all channels for bypassing sanctions, from oil smuggling to shell companies, to prevent it from obtaining nuclear weapons.

Asia

A positive trend is recorded this morning on Asian stock exchanges, drawing a tailwind from the green closing on Wall Street and the retreat of US government bond yields. The gains on the continent are sharply led by the KOSPI index in South Korea with an impressive jump of about 6%, recovering from similar sharp declines yesterday thanks to meteoric price increases in memory and chip giants SK Hynix (+12%) and Samsung (+8.5%). Japan joins the positive trend as the Nikkei index climbs by about 1%, supported by gains in the technology and semiconductor sector led by SoftBank (+4.0%) and Kioxia (+5.3%). Slight gains are also recorded in Hong Kong and China, as the Hang Seng index adds 0.8% and the Shanghai index rises by 0.2%.

Wall Street

Futures on Wall Street indicate this morning a continuation of the positive trend and a green opening, led by futures on the Nasdaq index which are climbing by about 0.4%, while futures on the S&P 500 and Dow Jones are adding about 0.1% and 0.05%, respectively. Yesterday, trading on Wall Street closed with a positive trend, as the leading indices broke a negative streak of three days of declines. The S&P 500 index climbed by about 0.4%, the Dow Jones added about 0.3%, and the Nasdaq index also rose by 0.3%. The volatility index (VIX) fell by 5.2% to a level of 15 points.

The main trigger for the positive turnaround in the markets yesterday was a sharp recovery in the government bond market. The 30-year bond yield plunged by 10 basis points to a level of 5.182%, its sharpest daily decline since October 2025. The 10-year yield fell to a level of 4.63%. The jump in bond prices came following the US Treasury's announcement on expanding and doubling the buyback program of long-term government debt starting in September. However, strategists at BNP Paribas and TCW were cautious and noted that it is too early to determine that a "ceiling" for yields has been reached, as the trend of rising yields is global.

The retreat in yields and the weakening of the dollar (DXY index fell by 0.7%) gave a strong tailwind to the technology sector, and especially to the sector's giants. The Roundhill Magnificent Seven ETF jumped and recorded its best trading day in about two months, led by Tesla and Amazon. On the other hand, heavy pressure was recorded in the chip sector, the SOX index fell against the backdrop of a Bank of America survey that defined the trade in the sector as "the most crowded in the market," alongside disappointment from OpenAI data and a convertible bond issuance by Nevius. In the focus of trading in individual stocks was the Moderna stock, which jumped by more than 170% following positive results in an advanced clinical trial for a personalized cancer vaccine in combination with Merck's Keytruda drug. Crypto stocks experienced a revival following a massive short squeeze that pushed Bitcoin beyond 68 thousand dollars.

In the macro plane, the minutes of the Federal Reserve meeting from July events revealed that senior officials still see a need for another interest rate hike if inflation does not continue to cool. The decision to leave the interest rate in the range of 3.5%-3.75% passed with a majority of 9 supporters against 3 opponents. Following the publication, the market pricing for the next interest rate hike was postponed to December.

Currency

Growing fiscal pressure, weak economic data, and uncertainty around Federal Reserve policy could increase pressure on the US dollar, despite its recent spot strength - this is estimated by currency strategists in the markets. Charu Chanana, chief investment strategist at Saxo, noted to CNBC that the rise in bond yields does not necessarily support the greenback (whose index stands at 98.8 points), if investors interpret it as an expression of fiscal risks, aggressive debt raising, or sticky inflation, rather than as a derivative of strong real growth. At the same time, in a review by Societe Generale, they emphasized that the cooling in consumption, employment, and inflation data is gradually eroding the main arguments for holding "bearish" positions on the American currency.

Tel Aviv

Dual-listed stocks are expected to provide a slight tailwind to the start of the trading day in Tel Aviv, as their theoretical weighted impact on the TA-35 index stands at an almost zero negative gap of only about 0.01%. This is after a mixed trend was recorded yesterday in New York among dual-listed stocks; on one hand, notable weakness in the chip and technology sector weighed on central stocks like Tower which returned with a negative gap of 1.55%, Elbit Systems (-0.91%), Palo Alto (-2.01%), and Enlight Energy (-0.25%). On the other hand, nice gains in some pharma and biotech stocks, as part of the global trend, including Opko Health which returned with a positive gap of 4.24% and Teva which presents a slight positive gap, alongside sharp jumps in smaller stocks like Enlivex and XTL, offset most of the negative pressure.

JPMorgan Analysis

The investment bank JPMorgan published a series of rating updates for prominent stocks on Wall Street, while lighting warning lights regarding companies suffering from a slowdown in the European macro or high balance sheet leverage, alongside expressing cautious optimism towards unique growth engines in the communications sector.

1. In the fintech sector, the bank downgraded the rating of Klarna Group to "neutral" from "overweight" and cut the target price to 18 dollars. Analyst Connor Allen noted that the retreat stems from the weakening economic environment in Europe, and in particular in Germany.

2. The rating of internet service provider Cogent was downgraded to "underweight" from "neutral". Analyst Sebastiano Petti noted that the decision is based on deep concerns about the company's performance, alongside a high net leverage level of 6.75x and negative free cash flow.

3. On the other hand, the investment bank chose to reaffirm "overweight" recommendations for communications companies Arqiva Digital Infrastructure and Telephone and Data Systems, with target prices of 45 dollars and 48 dollars respectively. At JPMorgan, they estimate that the combination of frequency sales, asset monetization, acceleration in fiber deployment, and structural value unlocking will lead to a wave of positive triggers that will boost the pair of stocks up the way.