Positive trend in Europe; Stability in contracts in New York

14:49

China announced today (Monday) that it is blocking the acquisition of the artificial intelligence company Manus by Meta Platforms (Facebook) in a deal worth about 2 billion dollars, after months of intense regulatory scrutiny.

In an official announcement, the authorities in Beijing stated that the deal violates the country’s investment laws, and ordered the parties to cancel it. The decision also includes a ban on foreign investment in the company, and signals the hardening of China’s position regarding the transfer of sensitive technological assets to foreign hands.

According to reports, Beijing sees artificial intelligence as a strategic infrastructure, and the current intervention highlights the country’s willingness to use regulatory tools to prevent knowledge leakage. The move is particularly unusual, because the deal has already started.

According to reports, Meta has already managed to integrate some of Manus’ technology into its products, which may make canceling the deal operationally and legally complex. Retroactive dissolution of this type of transaction may lead to disputes between the parties and create a problematic precedent for technology companies operating in the international arena.

13:22

Tower Semiconductor rising in early trading. The company and Axiro Semiconductor Inc, an American company specializing in advanced solutions for radar, satellite communications (satcom) and high-speed communications, today announced the availability of Axiro’s high-performance radar beamforming integrated circuits (BFICs), which are manufactured based on Tower’s leading silicon-germanium (SiGe) technology.

10:22

Trading in Europe opened with a positive trend – the Paris and Frankfurt stock exchanges rose by 0.3%, London unchanged.

08:50

In Asia this morning there is a positive trend, the South Korean stock market jumps by 2.5%, Tokyo by 1.3%, both indices at new highs. Shanghai and Hang Seng in Hong Kong unchanged.

The futures contracts in New York are down by 0.3% this morning on the background of a stagnation in contacts and a renewed escalation in the Strait of Hormuz, which is pushing oil prices up and leaving geopolitical tensions in the center of attention ahead of a critical week in the markets.

On Wall Street, this afternoon will open a particularly stormy week that includes the reports of four of the “Magnificent Seven” and the latest interest rate decision by Fed Chairman Jerome Powell.

On Friday, the Nasdaq rose 1.6% to close at an all-time high. The Dow Jones retreated 0.2%. The S&P 500 added 0.8% and set a record close for the ninth time this year. In weekly summary, the Nasdaq and S&P 500 climbed 1.5% and 0.6%, respectively, on their way to a fourth consecutive positive week – the longest streak of weekly gains the most since 2024. The Dow Jones retreated this week by 0.4%, snapping a three-week positive streak.

● The CEO did the unbelievable: this is how Intel became a sensation on Wall Street

In particular, chip stocks stood out, with the Philadelphia Stock Exchange (SOX) recording 18 consecutive days of gains, the longest positive streak ever. The index jumped more than 47% during the last 18 trading days.

The one who particularly stood out on Friday was Intel, which rose by 23% and even broke the record it set during the days of the dot.com bubble in 2000. This, after the chip company last night reported quarterly results that significantly exceeded expectations, and provided a strong forecast for the current quarter, thanks to solid growth in the field of data centers and artificial intelligence.

Also a company Texas Instruments Recorded an excellent week with an increase of about 19% following optimism for a recovery in chip demand. On the other hand, a company Snowflake gathered negative interest and lost about 10% of its value this week, after investors punished the stock due to a growth forecast for subscription revenues that did not meet the market’s optimistic expectations.

The sharp gains on Wall Street in recent weeks are largely based on a small group of giant technology stocks, which continue to pull the S&P 500 despite the geopolitical uncertainty surrounding the war in Iran.

Now, the upcoming earnings reports of the biggest companies — Alphabet, Microsoft, Amazon and Meta on Wednesday, and Apple on Thursday — are becoming a critical test of whether this rally can continue.

These four companies alone are worth almost 16 trillion dollars together, and make up about a quarter of the value of the entire index. This means that the direction of the entire market largely depends on their results and predictions. Investors expect to see not only strong results, but also forecasts that justify the recent gains, especially around the field of AI and investments in technological infrastructure.

Since the low in late March, the S&P 500 index has risen about 13%, with stocks such as Alphabet, Amazon, Nvidia and Meta jumping more than 25%. These increases reflect very high optimism on the part of investors, so the risk now is that if the reports do not meet the high expectations – the market may punish them and react with sharp declines.

In contrast to stocks on Wall Street, the bond market was less enthusiastic, with yields rising along the entire length of the curve, with the 10-year yield rising by about 5 basis points to 4.30%.

Traders in the US government bond market are now turning their attention to this week’s Federal Reserve meeting to understand how policymakers assess the inflation outlook, while tensions in the Middle East continue to keep oil prices high.

Government bond yields have been moving in a narrow range for the past two weeks, as traders followed the negotiations to end the war with Iran. Since oil prices are still significantly higher than their pre-war levels, economists have raised their inflation forecasts in the US and estimate that the Fed will only cut interest rates once this year.

In the commodity market, oil prices jumped last week, following the tensions in the Strait of Hormuz, which remains completely blocked. Brent oil climbed nearly 10% and closed around $105 per barrel, while American oil climbed over 7% and closed around $94. This morning there are increases of about 1% to 95.5 and 106.5 dollars.

In the foreign exchange market, although the main indexes on Wall Street continued to climb, the shekel weakened by 0.7% against the dollar this past week, to a level of 2.99 shekels to the dollar, among other things due to the strengthening of the dollar in the world. This morning the shekel traded at 2.98 shekels to one dollar.

A stormy week is also expected in the global economy – between Tuesday and Thursday, three days of interest rate decisions in Washington, Ottawa, London, Frankfurt and Tokyo are expected to end with no change in interest rates, with each of the central banks maintaining a hawkish and cautious approach against the background of the consequences of the war with Iran.

Another tension hovering over the “wait and see” policy expected from central banks this week is the uncertainty surrounding the identity of the next Fed chairman. The upcoming policy meeting may be Jerome Powell’s last in his role as head of the US central bank.

At the same time, the US Department of Justice announced the end of the investigation regarding irregularities in the renovation costs of the Fed building, a move that may clear the way for the approval of the appointment of Kevin Warsh, Trump’s candidate to replace Powell.

The Bank of Japan will be the first to announce a decision on Tuesday, as senior officials have signaled in recent days that they are inclined to reject another interest rate hike at this stage. On Wednesday, the Bank of Canada and the Federal Reserve are also expected to adopt a “wait and see” approach, while on Thursday the Bank of England and the European Central Bank are expected to send a similar message.

Although local conditions in any economy are a major factor, the developments in the Strait of Hormuz, a critical choke point for global energy supplies, may significantly affect the direction of global monetary policy.