Ahead of the trading opening: Peak of the reporting season in Tel Aviv — what to expect

The trading day opens at the peak of the local reporting season, which will be the main factor moving stocks this week. In the background, two macro axes continue to accompany the market: the direction of interest rates in Israel and the wait for Nvidia's reports in the US.

This week, the reporting season enters the final stretch with some of the heavyweights on the stock exchange. Mizrahi Tefahot will conclude the bank reporting cycle. After competitors have already reported, the central question is whether the financial margin holds up in a falling interest rate environment and whether provisions for credit losses remain low. It is important to remember that bank stocks have already surged sharply (the bank index rose about 9.6% in July), so the bar is high. As we have seen throughout the season, even a good report is not always enough when expectations are already priced in.

Alongside the banks, insurance companies, investment houses like Meitav and Mor, and retail companies Castro, Retailors, and Urbanica will report this week. The particularly interesting star will be Azrieli, the income-producing real estate giant, whose report is evaluated not only for malls and offices, but mainly for its expanding data center activity. This is the field that connects Azrieli directly to the global AI trend and provides a growth story beyond traditional real estate.

The Consumer Price Index published at the end of the week rose 0.3%, in line with expectations, and annual inflation fell to 1.5% — within the Bank of Israel's target. However, the outlook ahead is more complex: economists warn that the next indices, especially August, are expected to jump against the backdrop of rising fuel, flight, and rent prices, which could return inflation above 2% by the end of the year. This is exactly what the Monetary Committee will consider in its decision on September 1, when even optimistic forecasters no longer see more than one interest rate cut by the end of the year.

On Wall Street, after most reports are already behind us, investors are aiming for the big event of next week: Nvidia's reports on August 26. These will be examined as the central barometer of all AI trading and will largely dictate the direction of the chip sector, including the dual-listed Tower, Nova, and Camtek.

The week itself is relatively sparse on reports in the US, with an emphasis on retail (Walmart and Target), which will provide a picture of the state of the American consumer. In the background, the approaching Jackson Hole conference, where Fed Chair Kevin Warsh will speak for the first time in his role — a speech that may hint at the direction of interest rates in September.

This week directly touches the savings of most Israelis. The reports of the banks, insurance companies, and Azrieli affect stocks that are in almost every pension portfolio and training fund. If the large companies show that profitability holds up, it will support the market. If they signal erosion, a realization is possible after the strong rally of recent months.

The focus will be double: local reports this week and the wait for Nvidia next week. As throughout the season, it is worth remembering that a single quarterly report is a snapshot of a moment, and the difference between a stock that soars and one that falls lies mainly in the gap between the results and the expectations already built into the price. Long-term investors would do well to follow calmly, without getting carried away by a one-day reaction.