Ahead of trading: The giant that soared by 38% and oil returning to worry investors
Tel Aviv closed in the red as Mizrahi Tefahot disappointed and dragged the banks down, but Maytronics surged on reports of talks for FIMI to enter. On Wall Street, oil jumped and yields are at a 19-year high. What is expected today?
The trading day opens after a red day on the stock exchange, driven by a combination of disappointment from bank reports and the return of geopolitical tension. Let's start with yesterday's big story.
The star of yesterday was Maytronics, the pool robot manufacturer, which surged 38.3% after reporting that FIMI Fund — the leading Israeli private equity fund — is in talks to acquire control of the company. This is a big story for several reasons.
First, FIMI is considered one of the most successful investment funds in Israel, with a long track record of improving industrial companies, and its entry is perceived as a "seal of quality." Second, Maytronics has gone through a challenging period, and FIMI's involvement signals confidence in the recovery potential. The sharp jump reflects the market's assessment that such a deal, if completed, will improve the company and put an experienced hand on the wheel.
On the other side stood the banks. Mizrahi Tefahot, which concluded the bank reporting season, weakened 3.3% after the reports — and dragged the entire sector down (the index fell 2.6%, First International fell 4.3%). This illustrates again the phenomenon that accompanied the entire season: after the bank index jumped about 10% in July, expectations were high, and even reasonable reports were met with profit-taking.
The general picture was negative — TA-35 and TA-125 fell by 1.2%. Azrieli fell 4.4% after the reports, and Baldi fell 11.7% after the Ministry of Agriculture canceled a permit for a factory in Brazil in which it invested 21 million shekels. On the other hand, chip stocks stood out positively — Next Vision surged 7.2% and Tower 7.1%.
In New York, the trend was negative. The S&P 500 and the Dow fell 0.5%, the Nasdaq 0.3%. Two factors weighed. The first, oil: Brent jumped to 90 dollars after the memorandum of understanding between the USA and Iran expired, and Donald Trump said he does not see the war ending soon and even threatened Oman.
The second, the bond market: the 30-year yield jumped to 5.31%, the highest since 2007, against the backdrop of concern over the swelling national debt. High yields make capital more expensive and put pressure on growth stocks.
This week in the USA is sparse on reports, with an emphasis on the large retailers (Walmart, Target, Home Depot) that will provide a picture of the American consumer in the back-to-school season. The Fed meeting minutes will be published on Wednesday, and in the background is the wait for Nvidia next week.
The opening today will be influenced by the weakness on Wall Street and the high oil, but also by the continuation of local reports and the momentum of Maytronics.
For the Israeli saver, a day like yesterday illustrates two things: on one hand, the disappointment of the banks reminds us that stocks that ran hard accumulate high expectations that are difficult to meet; on the other hand, the Maytronics story shows that even in a volatile market, real value-enhancement deals continue to happen and reward investors. The focus this week will be on the end of the reporting season and on the geopolitical arena, which has returned to being a key volatile factor.
