Introduction
As investors brace for the bell, a shortened week on the Tel Aviv Stock Exchange sets the stage for a cautious pre-market mood. Trading was reduced to two sessions last week due to the Rosh Hashanah holiday, with leading indices ending essentially flat. Markets will be closely watching Bank of Israel decisions, inflation signals from the US, and global tech momentum as trading resumes on the 8:30 open.
1) Equity Market Snapshot
The Israeli benchmark indices TA-35 and TA-125 closed the week with almost no change, echoing a broader patience in markets ahead of major macro cues. The sharp gains on Thursday, led by dual-listed stocks that had moved higher in the US, helped lift the mood. Sector leadership was seen in Tel-Aviv Insurance, which climbed about 2.7% intraday, adding around 90% since the start of the year. The Banks index also posted a notable advance, jumping around 2% on the week.
Arbitrage trades, which run both in New York and Tel Aviv, are unlikely to drastically influence the opening bout, but individual names will still react to domestic and global shifts. Expectations call for some modest movement in names like Teva, NICE, and Orbitec as global peers show varying momentum. Traders will look to Monday’s Bank of Israel rate decision for a directional nudge, while Tuesday’s earnings from Nike and Carnival in the US could influence cross-asset sentiment.
2) Bond Market Focus
In local debt markets, corporate bond indices showed gains around 0.7% for the week, with Tel Bond-Indx 10+ edging up slightly. The message from local banks remains consistent: maintain a balanced duration and lean toward inflation-protected securities in an environment of subdued inflation expectations along the curve. The guidance suggests a modest tilt toward 0- or fixed-rate instruments with a careful eye on duration to navigate any rate path surprises.
Across the Atlantic, Treasury yields ticked higher, then steadied, after the US PCE print. The 10-year yield hovered near 4.18% as the market priced in a cautious path for the Federal Reserve, with an eye on whether further rate cuts will be warranted as inflation cools.
3) Commodities and Currencies
The shekel wobbled modestly, slipping about 0.2% against the dollar to around 3.34 shekels per USD. Since the start of September, the dollar has inched higher while the euro has firmed against the shekel, though the year-to-date trend remains mixed. Oil prices continued their positive momentum, rising roughly 1% on renewed supply concerns as Ukrainian strikes targeted energy infrastructure. US crude hovered around $65.7 per barrel and Brent near $70.1, underscoring a cautious supply-demand balance.
In crypto, Bitcoin tethered near $109,000, reflecting ongoing risk-on/off dynamics across risk assets. The currency moves and commodity prices will feed into expectations for inflation and interest-rate paths, which in turn guide asset allocation decisions in the local market.
4) Macro Backdrop
Tomorrow at 16:00, Bank of Israel will release its rate decision. Given the global backdrop and recent US easing, markets expect the Israeli central bank to hold rates steady in the near term, with a more uncertain path for future cuts due to ongoing security concerns and domestic inflation dynamics. Analysts widely anticipate the decision to keep policy unchanged this cycle, with potential easing penciled in for November, depending on how geopolitical risks evolve and domestic inflation trends hold.
Globally, the US PCE index, the Federal Reserve’s preferred inflation gauge, showed a 2.9% year-over-year rise, keeping the Fed on a dual-track path: potentially two 25-basis-point cuts by year-end in a scenario of cooling inflation, but with data-dependent momentum. Market commentators also note that the Fed has signaled patience as it weighs labor-market resilience against inflation moderation. In this mix, Israeli forecasts increasingly hinge on geopolitical risk and how the domestic economy absorbs external shocks.
5) Expert Outlook
In the earnings and forecast space, Micron Technology has captured attention for the AI-driven demand cycle. After a strong run, some analysts bumped price targets on the stock, highlighting improved gross margins and product mix, though concerns about competitive pressure from Samsung in the high-bandwidth memory space remain. Bank of America raised Micron’s target to $180 from $140, while Cantor increased theirs to $200, reinforcing an upbeat view on AI-driven memory demand, even as margins face competitive and capex headwinds. While these targets reflect optimism for the AI supply chain, they also underscore the risk of supply-driven volatility that investors should monitor when positioning ahead of market opens.
Bottom line for traders
With a shortened week on the horizon and a critical policy decision due, volatility could be muted early but should pick up as fresh data hits. Expect muted moves in major indexes in early trade, with possible direction from Bank of Israel’s rate decision and the global risk backdrop. Position size with care and stay alert to cross-asset signals—rates, inflation, and geopolitical developments will continue to shape the path of Israeli and global markets.
