Mixed trend in Europe; The contracts in New York are green

10:40

Norway’s sovereign wealth fund, the world’s largest, reported its best quarterly return in six years, largely thanks to gains in the technology stocks it owns. The fund, which manages approximately $2.3 trillion, recorded a return of 11.5% in the second quarter – the best result since the second quarter of 2020.

Stocks were the main engine of growth, with a return of 16%, while investments in bonds yielded 1.1%. Investments in real estate and non-tradable infrastructure yielded a return of 1.8% each.

10:38

A consortium of investors, which includes Jeff Bezos, is approaching a deal to purchase a minority stake in the Liverpool club from Fenway Sports Group, the owner of the Boston Red Sox baseball team. Bezos sold shares in Amazon worth about 4 billion dollars last week.

The deal reflects a value of about 8 billion dollars for Liverpool. According to the sources, investors will be given the option to purchase the rest of the club in additional transactions in the future.

The deal has not yet been completed and may be cancelled, but if it goes through it may be announced as early as Wednesday.

Bezos is expected to invest through K5 Global, an investment company managed by Michael Kibbs and Brian Baum, which also invests in SpaceX. According to the sources, K5 is expected to inject the largest amount in the deal.

10:31

Trading in Europe opened this morning with a mixed trend – Paris falls slightly, the Frankfurt Stock Exchange rises by 0.2% and London remains unchanged for the time being.

06:50

Cautious optimism is registered in the markets this morning in light of the uncertainty surrounding the agreement between the US and Iran and good reports from two of the AI ​​stocks on Wall Street. Meanwhile, the price of oil rises by 0.5% to $89.5 and completes six consecutive days of gains, the longest streak of gains since April.

Asia

In Asia, there is a mixed trend: the Kospi in South Korea jumps by about 5%, the Nikkei in Japan is unchanged, the Hang Seng in Hong Kong drops by 1%, the Shanghai index in China rose slightly.

An early positive signal for the chip sector on Wall Street, South Korea’s two SK hynix and Samsung Electronics are surging this morning and it comes after the strong reports from Corewave and the optimistic forecast from Super Micro, the two, rose sharply in late trading on Wall Street.

Wall Street

Wall Street closed lower yesterday, led by technology stocks, after hopes for the reopening of the Strait of Hormuz faded and doubts grew about the possibility that the US and Iran would reach an agreement. The S&P 500 fell 0.3%, the Nasdaq lost 0.6% and the Dow Jones was unchanged.

The futures contracts in New York are trading this morning with a slight increase of up to 0.2%. It is possible that volatility will register in preparation for the publication of the consumer price index which will be published in the afternoon and before the opening of trading. The expectation is a moderation in price pressures which may reduce the pressure on the Fed to raise interest rates. If so, Wall Street will probably respond positively and the response will resonate with the local market.

Tel Aviv

After the excellent report of Bank Hapoalim yesterday, this morning we are waiting for the report of Bank Leumi to be published this morning.

Dual stocks won’t have much impact this morning, most without a significant arbitrage gap. Two of them will balance each other: Tower will go down by about 3% at the opening, Camtech will go up by a similar rate. Nikes, which lost about 25% in the last two days, will open with an increase of over 3%.

Slight declines were recorded yesterday after a volatile day that was mostly conducted with declines of up to 1% that got weaker and weaker until the end of the day. The Tel Aviv 35 Index moved to a slight increase ahead of the lockdown. The TA 90 index continued the negative trend.

The banking index stood out in the opposite trend with an increase of 2.5%, on the other hand the insurance index decreased by 2%, a particularly sharp decrease was also recorded in the security shares index. The declines in the index were led by the Elbit share despite having published excellent reports. But it seems that investors expected more mainly in light of the high pricing of the stock.

A similar scenario was repeated with Torfaz shares which also reacted with a sharp drop after the publication of a report that exceeded expectations. Nikes continued with a sharp negative reaction after the disappointing reports it published yesterday.

the currency market

The shekel is quite stable this morning and trades at about 3 shekels for one dollar.

The effect of the joint intervention of Japan and the United States in the foreign exchange market is fading, and the yen is weakening again and approaching 160 yen to the dollar – a level that is considered the threshold at which the Japanese authorities may consider further intervention.

This is a significant reversal for the Japanese currency, which strengthened sharply after the joint intervention last month. One of the reasons for the yen’s weakness is the continued activity of the carry trade transactions. According to Derek Helfani of MUFG Bank, the trend may continue as long as the stock markets demonstrate resilience and market volatility remains low.

Another thing you should know

Wall Street is as expensive today as it was in the dot-com bubble – but there is a difference.

The S&P 500 index currently trades at a Shiller multiple of about 42. The last (and only) time the index stayed at these levels was at the height of the tech bubble, around the months of January to July in 2000, just before the market began to collapse by about 50%. The meaning: the investors are currently paying a particularly high price in relation to the long-term profits.

But according to FactSet: in the current reporting season, the profits of S&P 500 index companies are at a growth rate of about 50% compared to the corresponding quarter. The fastest pace since the second quarter of 2021.

About 86% of the companies that have already published reports exceeded the profit forecasts, compared to an average of about 78% in the last five years. All in all, the companies exceeded profit forecasts by about 29% on average, a particularly unusual profit surprise. The technology sector is expected to show a profit growth of about 70%, but eight of the 11 sectors in the index are expected to register double-digit growth in profits.