Overview: What to watch before the bell
Markets moved in a tight range as traders prepared for the week ahead. In Tel Aviv, the shortened week due to the Jewish holiday season left the main indices roughly flat on the week’s close, with big swings during trading sessions. On the week, dual-listed names led the way in some sessions, while sector weights shifted in others. As a result, the major indices in Israel—TA-35 and TA-125—finished around where they began the week, creating a cautious backdrop for Monday’s opening.
1) Stock Market: Tel Aviv snapshot and big movers
Last week saw selective strength in the Israeli market. The Tel Aviv Insurance Index jumped about 2.7% on the session, contributing to a year-to-date gain. The Banks index rose roughly 2%, signaling continued interest in financials despite the global pull of risk-off and rate expectations. In terms of individual stocks, the week’s momentum favored dual-listed names that trade both in Tel Aviv and New York, with Camtek, Teva, and Tower Semiconductor among the notable movers during the period.
At the same time, some local shares faced downgrades in pre-opening commentary. Teva Pharmaceuticals was expected to slide around 2.8%, while NICE Ltd. faced a pullback near 3%. Elbit Systems was seen higher by about 1%, Ormat Technology by around 2%, and Formula Systems by as much as 4.6%, reflecting a mix of sector rotations and stock-specific dynamics.
Looking ahead, the opening bell could be influenced by how investors interpret the Bank of Israel’s policy stance and guidance for the coming months, as discussed below. Expectations for domestic rate moves remain cautious, with the market pricing in relatively modest odds of a near-term rate cut, but with a broader window for potential easing later in the year.
What to monitor this week in equities
Beyond local stories, U.S. equity dynamics continue to shape global sentiment. Sentiment in the week started strong but showed signs of fatigue in midweek after remarks from senior Federal Reserve officials suggesting that prices are high by historical standards. Despite that, some markets saw supportive momentum on the heels of improving inflation indicators, while analysts debated the pace and timing of further policy accommodation.
2) Bond Market: Local and U.S. yields
In the local debt market, Tel Bond corporate indices advanced about 0.7% during the week, while the Tel Gov-Short index rose a touch, around 0.05%. Investment grade and duration positioning remains an area where investors are looking to balance sensitivity to inflation expectations with the country’s macro risk profile.
On the U.S. side, Treasury yields moved within narrow ranges as investors digested fresh inflation data and the Federal Reserve’s guidance. The 10-year yield hovered around 4.18%, while the 2-year yield dipped slightly to roughly 3.64%, highlighting a slight steepening of the curve as market participants parse policy expectations against growth signals.
3) Commodities and Currencies
The currency market showed modest changes, with the Israeli shekel weakening about 0.2% against the dollar to roughly 3.34 shekels per USD. Since the start of September, the dollar has strengthened modestly while the euro has gained against the shekel on a year-to-date basis amid diverging global growth and inflation trajectories.
Oil continued its positive trend, with Brent around $70 per barrel and U.S. crude near $65–66, supported by supply concerns in certain regions and continued demand resilience. In cryptocurrencies, Bitcoin hovered near $109,000, reflecting a mixed risk sentiment among traders who weigh macro uncertainty against the potential for further tech-driven gains.
4) Macro and Policy: What the data indicates
All eyes turn to the Bank of Israel’s policy decision, due next Monday at 16:00. After a prior round of easing in major economies, investors are weighing whether Israel will follow suit in the near term or take a more cautious stance given regional tensions and domestic uncertainty. Most economists expect the BoI to hold rates steady in the near term, though some strategists see a possible move later in the year if inflation trends and geopolitical developments evolve.
Across the Atlantic, the U.S. PCE price index remained a focal point for traders, showing an annual pace around 2.9% in August. Analysts say this level keeps the Fed on a gradual easing trajectory, with markets pricing in a couple of 25 basis-point cuts by year-end, albeit with uncertainties tied to labor market resilience and global events. International firms and local banks have offered mixed views on the timing and magnitude of future rate changes, with some arguing for earlier relief and others advocating patience until inflation pressures subside more decisively.
5) Outlook and notable earnings to watch
From a stock-picking perspective, Micron Technology has been one of the notable stories over the past year, having surged around 70% and reaching new valuation highs before some recent volatility. Following its latest results, analysts at major banks have adjusted price targets higher, though earnings visibility remains shaped by competition in the AI memory market. Bank of America raised its target to $180 from $140 with a Neutral rating, citing continued demand in AI applications but noting heightened capex by memory suppliers. Cantor Fitzgerald also lifted its price target to around $200, calling it a potential leader in coming quarters.
Investors should watch for guidance around AI-driven demand, margins, and the strategic responses of sector leaders as the week unfolds. In Israel, the BoI decision and the evolving geopolitical backdrop will continue to influence risk appetite and sector rotation. As always, maintain a balanced view across stocks, bonds, and currencies to navigate the mix of domestic and global drivers heading into the week.
