2024-02-22 06:05:05
Trade review: current reports, trends, indices, stock prices, bonds, foreign exchange and commodities and analyst recommendations
08:01
1. The stock market
The trading day at the Tel Aviv Stock Exchange is expected to open with a positive trend. Last night (Wed), trading in Tel Aviv closed with a mixed trend. The Tel Aviv 35 index fell by 0.3% and the Tel Aviv 90 index rose by 0.2%. The biomed index shed 1.4%, while the marketing chains index rose by 1.7%.
The Dalia Energy Group, a producer and supplier of private electricity, reported last night (Wed) on entering into an electricity supply agreement with the HOT Group. As part of the agreement, which is 10 years long, Dalia will supply electricity to Hot Energy – the electricity supply arm of the telecommunications and television group.
stock Al Al plunged by about 12%. This is after the Airports Authority confirmed that United Airlines will return to operations in Israel in March. However, United has yet to confirm the report.
92% of the shares of the complicated construction company Group Hanan Mor are supposed to go to its major creditors, according to a request submitted by the administrator of the settlement, attorney Ehud Gindes to the High Court on Tuesday. After several weeks in which the manager appointed to the company by the court, Dodo Zevida, worked out an arrangement designed to enable the payment of the many debts accumulated by the company which amount to approximately NIS 2.7 billion. Following the report, Hanan Mor shares plunged last night (Wed) by 15%.
This morning in Asia, the main indices are trading in a positive trend. The Japanese Nikkei jumps by about 2% and breaks a new record since 1989 when it traded at a level of 39,029. The Hang Seng rises by 0.8%, the Shanghai Stock Exchange rises by a similar rate and the Kospi adds 0.3% to its value.
In the USA, the futures contracts are currently traded in the green market.
Last night (Wed) on Wall Street, trading closed with a mixed trend. The Nasdaq was down 0.3%, the Dow Jones was up 0.1% and the S&P 500 was up 0.2%.
The chip giant Nvidia released its financial results for the fourth quarter of 2024, thus concluding a year according to its fiscal division. Nvidia reported revenue of $22.1 billion, 22% more than the previous quarter and 265% more than the same quarter last year, analysts’ forecasts stood at $18.9 billion and expected revenue growth of more than 200%.
Bottom line, the company reported a profit of $5.61 per share. Analysts’ forecasts were a profit of $4.23. The stock is now reacting in late trading, and is up 9%.
The CEO of Intel, Pat Gelsinger, presented last night (Wed) the plan he has been working on for a long time: Intel is officially opening its chip factories – which until now have preferred home-made chips – also for other companies. Meanwhile, Gelsinger is building a Chinese wall between The production system to the development system, in order to avoid a built-in conflict of interests, and turns the network of Intel’s manufacturing plants into a profit and loss unit, which is measured and rewarded according to the transactions it brought in from external customers.
later in the evening, Microsoft announced last night (Wed) during trading that it will manufacture one of its future chips at Intel factories, which are expected to be released on the market within a year or two. The value of the transaction is estimated at approximately 15 billion dollars in revenue for Intel over the years of production of the chip series over all the production, assembly, packaging and testing processes.
● The one that goes up and the one that goes down: the dramatic day that passed for the two chip giants
2. The bond markets
In the local debt market, the ten-year government bond yield traded up one basis point and at 4.19% last night (Wed), the two-year bond traded at 3.75%. The corporate bond indices, Tel Bond 20, 40 and 60 traded unchanged.
In the American debt market, government bond yields are slightly down this morning. The yield on the 10-year US bond currently stands at 4.3%.
3. The commodity and currency markets
The dollar continued to strengthen against the shekel, trading on Wednesday at a rate of NIS 3.67. In the background, the disappointing GDP data for the fourth quarter in Israel published at the beginning of the week. The euro strengthened to a rate of NIS 3.97.
● The interest rate gap is secondary: what will happen to the shekel if the Bank of Israel lowers the interest rate?
In the commodity market, oil contracts are trading slightly higher this morning. The price of a Brent barrel is 83.3 dollars.
Bank of America published last night (Wed) a reference to the direction of oil prices considering the possibility of interest rate cuts this year. According to the bank: “Global energy prices have been on a downward trend for almost two years. Brent fell from a peak of $139 per barrel in 2022 to a low of $70 per barrel at the end of last year.” “However,” the bank says, “since the beginning of December, oil managed to buck the trend observed in other energy markets and recovered against the backdrop of OPEC+ cuts and a complex geopolitical landscape.”
“Policy measures by the Biden administration regarding Russia, Iran and Venezuela, a surge in US shale output, along with warmer weather and more renewable energy, as well as sharp interest rate hikes by the Fed and the ECB, forced OPEC+ to cut oil output. The output cuts translated into an increase in spare production capacity. “Oil seems relatively cheap, especially considering where global inventories are today.”
“Inflation did come down with lower energy costs, but core inflation, as well as wage growth, has been stubbornly sticky in the US for some time. Our economists still expect significant interest rate cuts this year. If monetary policy is eased, we believe that the downward pressure on energy prices observed in the last two years is likely to reverse if OPEC+ discipline holds.”
4. Macro
From the minutes of the Federal Reserve’s Open Market Committee it emerged last night (Wed) that its members expressed both their satisfaction and caution regarding the interest rate cut. As recalled in the interest rate announcement two weeks ago, the members of the open committee decided to leave the interest rate unchanged and announced that they would probably wait with lowering the interest rate until more data was accumulated that would ensure that inflation is indeed falling.
“The members of the committee believe that it is too dangerous to lower the interest rate too quickly and they have not yet achieved the security required for inflation to drop sustainably to 2%”, what is more, the members of the Fed see risks of a renewed increase in inflation, this in light of the economic activity in the US, the ongoing growth and the job market, which remains strong even after the aggressive interest rate hikes.
In addition, the members of the committee decided to slow down the rate of bond sales, in order not to cause shocks in the market, but they intend to continue reducing the bank’s holdings, which amount to no less than 7.6 trillion dollars.
Later today (Thursday), purchasing managers’ indices are expected to be published in various European countries. At the same time, the Consumer Price Index in Hong Kong is expected to be published later today along with the Consumer Price Index in the Eurozone.
5. Forecast
Ahead of the interest rate decision in Israel next Monday, expectations are growing for another interest rate cut. In Mizrachi Tefahot, Chief Market Economist Ronan Menachem writes that “the latest data on the economy allow the Bank of Israel to take an interest rate cut already in the next decision. Among these, the recent devaluation of the Shekel. Although this scenario seemed far off until recently, the price index for the month of January, which was once again lower than expected , and the economic growth figures for the last quarter of 2023, which were surprising in their severity, put him back on the table.”
The Bank of Israel will consider the interest rate decision while waiting for the approval of the 2024 budget. “If the interest rate does go down, it will be a second cut cumulatively to 0.5% since the beginning of the year, and this at a time when the interest rates in the US and the Eurozone are not showing signs of direction, which may put pressure on the shekel. Added to this are the security incidents,” adds Menachem.
“If the bank does choose to lower the interest rate again – despite the cautious approach it has adopted since the beginning of the increase in inflation – it will be able to make use of its foreign exchange balance sales program if the shekel reacts aggressively. This plan may curb excessive devaluation of the local currency, but the volatility in the foreign exchange market will continue,” Menachem predicts.
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