Israeli Markets Rally Following Bank of Israel Rate Cut as Shekel Holds Steady

Or Poria, Chairman of Poria Financials, released his weekly economic review, analyzing the past trading week, the Bank of Israel's interest rate cut, and the foreign exchange market.

According to Poria, the U.S. trading week is expected to open with relative stability, as technology stocks provide a tailwind to the market, led by the semiconductor sector which continues to exhibit a positive trend. Conversely, oil prices remain at elevated levels alongside bond yields, a combination that weighs on the market and is reflected in a negative trend for the Dow Jones index.

In contrast, the Israeli market stood out positively over the past week, posting gains even without a direct correlation to global market trends. The backdrop to this performance is the Bank of Israel's interest rate cut, which the market had anticipated but seemingly priced in only partially. However, it is important to remember that the rate cut was bound to happen—either in the current decision or the next—and therefore, the surge in gains driven by it should be approached with a degree of caution.

In the foreign exchange market, the shekel continues to demonstrate stability against major currencies, with the dollar and the euro hovering around levels of 3 shekels and 3.5 shekels, respectively. Looking at the medium and long term, there is no change in the assessment that fundamental economic conditions continue to support the strengthening of the shekel. Foremost among these is Israel's current account trade surplus, which continues to provide structural support for the local currency against the dollar and the euro.