Wall Street rallies to start the week as volatility eases; European indices follow suit while Israeli markets fall sharply

Global stock markets posted mixed performance on Monday, August 4, 2025, as strong gains in the U.S. and Europe contrasted with steep losses in Tel Aviv. Asian equities also traded mostly higher, buoyed by tech strength and resilient investor sentiment.

As investors head into Tuesday, August 5, optimism remains intact across major economies. However, regional divergence, especially between North America and Israel, continues to shape market dynamics.

U.S. Markets Rally as Small Caps and Tech Lead Gains

Wall Street saw broad-based gains to start the week. The Russell 2000 surged +2.10% to 2,212.30, leading major indices with strength in small-cap growth and industrials. The Nasdaq climbed +1.95% to 21,053.58, while the S&P 500 rose +1.47% to finish at 6,329.94. The Dow Jones Industrial Average gained +1.34% to close at 44,173.64.

Volatility dropped sharply, with the VIX plunging -14.03% to 17.52, its lowest reading in weeks. The U.S. Dollar Index edged up +0.05% to 98.83, holding firm as bond yields stabilized.

Canada Declines Despite U.S. Momentum

Canadian equities bucked the North American trend. The S\&P/TSX Composite Index fell -0.88% to 27,020.43, as weakness in energy, materials, and financials dragged the market lower.

Europe Follows Wall Street Higher with Broad Gains

European markets posted strong gains across the board, tracking the rally in U.S. equities and supported by easing inflation and robust earnings reports. The EURO STOXX 50 rose +1.49% to 5,242.32, while Germany’s DAX added +1.42% to 23,757.69. France’s CAC 40 climbed +1.14% and London’s FTSE 100 rose +0.66% to 9,128.30.

Additional regional moves included:

• MSCI Europe: +1.02% to 2,373.89
• Euro Index: +0.06% to 115.70
• British Pound Index: +0.05% to 132.89

Asian Markets Start the Week Strong

Asian equities closed higher on Monday as improved risk appetite and strong corporate results supported momentum. The KOSPI Composite Index rose +1.23% to 3,186.34, while Australia’s S&P/ASX 200 gained +1.14% to 8,762.20.

Japan’s Nikkei 225 advanced +0.76% to 40,596.39, supported by exporters and automakers. In China, the SSE Composite Index rose +0.53% to 3,602.13, and the Hang Seng edged up +0.26% to 24,798.79.

India’s SENSEX was the outlier, dipping -0.13% to 80,912.87, as investors booked profits after recent highs.

Tel Aviv Stocks Drop Sharply Across the Board

Israeli markets saw significant losses on Monday, sharply underperforming global peers. The TA-35 Index dropped -0.65% to 2,990.24, while the TA-90 Index fell -1.90% to 3,263.01. The TA-125 Index declined -0.96% to 3,050.85.

Sector-specific indices also declined:

• TA-125 Value Index: -1.81% to 3,456.89
• TA Banks & TA-90: -1.31% to 3,410.59
• TA Sector Balance Index: -1.31% to 3,539.31

Bond markets were more stable. The All-Bond Index rose +0.17%, while the Short-Term Government Bond Index edged down -0.02%. Trading volume on the TA-125 exceeded 2.8 billion shekels.

Tuesday, August 5 Outlook: Key Data Ahead

Investors are watching closely for U.S. services PMI data and further earnings from Europe and Asia on Tuesday. Futures point to a slightly higher open in U.S. markets, while Asian indices are set to continue their upward momentum.

With volatility easing and central banks maintaining stable policy, global equities remain supported in the short term. However, sharp losses in Tel Aviv and Canada highlight the risks of sector-specific headwinds and regional divergence.