Trading Week Outlook: Iran Attack Cancelled and Market Expectations
The trading week opens on a calmer note following the cancellation of the expected attack on Iran. The reduction in geopolitical tension may support the stock market, particularly in sectors sensitive to instability.
The trading week opens on a calmer note than it seemed just yesterday. Despite a tense weekend, the attack that was reported to be imminent has been cancelled. This serves as the backdrop for the market opening.
Over the weekend, reports accumulated regarding a major American-Israeli bombing operation against energy infrastructure in Iran. In Israel, readiness was raised, American embassies across the region issued warnings, and an Iranian official even threatened the evacuation of Gulf states. It appeared the region was on the verge of a sharp escalation.
However, at the last moment, Donald Trump backed down and the attack was cancelled. Estimates suggest a combination of diplomatic pressure, internal opposition in the US to further expansion of the campaign, and perhaps an Iranian signal that allowed for the retreat. Either way, the immediate threat has been removed, at least for now.
In terms of the market, the logic is simple: capital markets dislike uncertainty, and the calming effect reduces it. The relief may translate into gains at the opening, especially in sectors hit by instability, such as real estate, banking, and insurance. It is important to keep things in proportion: the cancellation removes the immediate risk, but the status quo with Iran remains fragile, and as seen in recent months, tensions can flare up again at any moment.
The cancellation carries another piece of news: it removes, at least temporarily, the threat to the interest rate cut cycle. The Bank of Israel hinted that renewed escalation would bring back uncertainty, preventing further rate cuts after two consecutive reductions. With the calming, the path to another cut later in the year remains open—good news for borrowers and the real estate market.
Friday was positive, with the stock exchange climbing 1.3% after Donald Trump announced an agreement to disarm Hamas. On a weekly basis, however, the exchange lost 2.5%.
In monthly terms, July was positive overall: the TA-35 rose 2%. The stars were the banks, which jumped 9.6% (Mizrahi Tefahot jumped 15.6%), and the oil and gas index, which rose 9.2%. On the other hand, it was a bad month for chips, with Nova falling 22.2%. This split illustrates again that the local stock exchange is not just about technology.
Wall Street concluded a positive week despite five turbulent days. On Friday, the Nasdaq rose about 1%, the S&P 500 0.7%, and the Dow 0.5%. The star was Amazon, which jumped 15% after excellent reports led by its cloud division, AWS. Microsoft continued its rally from Thursday. Conversely, Apple fell 7% on disappointment in services and China, and Meta remained weak.
The overall message from the reports: the four giants (Amazon, Microsoft, Meta, and Alphabet) are expected to spend a total of 720-745 billion dollars on capital investments in 2026—a huge figure that calmed fears of a slowdown in AI but also highlights the scale of the bet. A warning point: the 10-year bond yield jumped to 4.73%, the highest in over a year, against the backdrop of the Fed's decision to leave interest rates unchanged.
After American tech giants and several Israeli companies on Wall Street reported over the last two weeks, this week the reporting season opens in Tel Aviv. Among the prominent names reporting are Tower, Nova, Enlight, Gilat, Ormat, Bezeq, Nice, and El Al. The reports of local chipmakers (Tower, Nova) will be examined especially in light of the difficult month the sector has endured, and El Al will be evaluated against the backdrop of fluctuations in the aviation industry in the shadow of tensions.
The week opens on a more positive note thanks to the cancellation of the attack, but two main forces will drive trading: the arena with Iran (which has calmed down but remains fragile) and the local reporting season.
