Tel Aviv closes lower, led by insurance stocks

Market review: live updates, trends, indices, stock prices, bonds, foreign exchange, commodities and analyst recommendations 17:30 After yesterday’s storm in the market, from sharp declines to gains at the close, pessimism returned today and the market ended lower, with losses widening toward the close. The geopolitical picture remains far from stable. Iran said it had stopped its attacks against Israel, but warned it would resume action if Israel continues the operation in Lebanon. Meanwhile, Israel’s prime minister said the confrontation with Iran and Hezbollah is “not yet over.” In the north, the war continues, and the IDF is evacuating the city of Tyre in southern Lebanon. The Tel Aviv 125 Index fell 1.2%, and the Tel Aviv 90 Index lost 0.7%. The declines were led by the insurance index, which dropped more than 2.5%. Menora and WeSure Global Tech shares lost more than 3%. The Tel Aviv Oil and Gas Index fell 1.9%. The cleantech index was the only sector index to post a gain, rising 0.5%. Green energy stocks led the Tel Aviv 125 Index, headed by Doral Energy, Enlight Renewable Energy and Energix. Ormat lost more than 4%. Also today, shares of Arit Industries fell after reports in the press said the Defense Ministry had frozen orders from small and mid-sized defense companies because of budget overruns. The stocks that stood out positively were those of the two most recent additions to the local exchange, the cleaning and security company T&M and the food supplements producer Gallem, on their first trading day. T&M completed a fundraising of 400 million shekels at a valuation of about 750 million shekels, post-money, while Gallem, controlled by FIMI, completed an offering at a valuation of 1.03 billion shekels. On the other hand, Teva stood out negatively after returning to Tel Aviv with negative arbitrage. In the background is the report on share sales by CEO Richard Francis. 17:00 Shares of Meitav Investments are falling about 6%. Three decades after an exit in Check Point, which paved the way for their success, brothers Eli and Nir Barkat, together with their partner Yuval Rachbi, are on the path to the biggest realization of their lives. Last week, the trio’s investment fund, BRM, hired JPMorgan to look for a foreign investor to buy its shares, 24.1%, in the investment house. What prompted BRM to advance the giant exit move in Meitav, and what may make it difficult for them to collect the money? The basic reason for the move led by Eli Barkat and Yuval Rachbi, with Nir Barkat’s shares, as minister of economy, held in trust, is of course the big money. If BRM succeeds in realizing its holdings in Meitav at the current market price, it would be an exit worth 3 billion shekels, more than $1 billion, representing an exceptional return of hundreds of percent.

16:36 Modi’in Energy, the limited partnership engaged in oil and gas exploration, is jumping about 12% after announcing this morning that it is examining a capital raise through the issuance of the partnership’s securities, including by way of a non-uniform offering. The proposed securities issuance, if and when completed, would be carried out through a shelf prospectus report under the partnership’s shelf prospectus, as part of financing the acquisition of rights in the Big Foot oil field in the Gulf of Mexico.

16:04 The race for the last place on the power grid for power plants in the coming years has become especially close, as the Dorad power plant signed an EPC agreement with Manrav, together with an international partner. Manrav will receive half the amount, 1.5 billion shekels. The agreement brings Dorad one step closer to financial close, in an effort to beat its competitor Reindeer, which has not yet signed a similar agreement. Neither power plant has signed a gas agreement yet, although Dorad says it is in “advanced negotiations” for such an agreement. According to Manrav’s announcement, “Dorad 2 power plant is expected to operate on natural gas using combined-cycle technology and with an estimated capacity of about 800 megawatts. The total scope of the project is estimated at about 3 billion shekels, with Manrav Group’s share expected to be about 1.5 billion shekels.” In addition, “the award is subject to signing a binding agreement and obtaining approval from the project financiers for the agreement. Subject to the fulfillment of the required conditions, construction work is expected to begin toward the end of 2027, and completion of the project is expected during 2032.”

15:49 After yesterday’s storm in the market, today was relatively calm on Ahuzat Bayit. However, the geopolitical picture remains far from stable. Iran said it had stopped its attacks against Israel, but warned it would resume action if Israel continues the operation in Lebanon. Meanwhile, Israel’s prime minister said the confrontation with Iran and Hezbollah is “not yet over.” In the north, the war continues, and the IDF is evacuating the city of Tyre in southern Lebanon. Trading in Tel Aviv is in negative territory and with relatively low turnover. Insurance stocks are mainly weighing on the market, losing 2.5%. Menora and WeSure Global Tech shares are losing more than 3%. On the other hand, green energy stocks are leading the Tel Aviv 125 Index, headed by Nofar Energy, Enlight Renewable Energy and Energix. Ormat is losing more than 4%.

14:00 Trading in Tel Aviv continues to be mixed. The Tel Aviv 35 Index is down about 0.4%, while the Tel Aviv 90 Index is up about 0.8%. The declines are now led by the insurance and financial indices, which are weakening by about 2.2% and 1.2%, respectively. On the other hand, the cleantech and technology indices are leading the gains, advancing about 1.6% and 0.9%, respectively.

12:15 Trading in Tel Aviv is currently mixed. The Tel Aviv 35 Index is down about 0.7%, while the Tel Aviv 90 Index is adding about 0.3%. The declines are led by the insurance and defense stocks indices, which are weakening by about 2% and 1.5%, respectively. The banks index is down about 0.3%. On the other hand, the cleantech index is leading the gains, rising about 0.65. Teva is falling in Tel Aviv trading after weakening yesterday in New York. In recent trading days, reports said CEO Richard Francis sold shares as part of an existing blind stock sale plan. According to reports, Francis sold 6,153 Teva shares at an average price of 34.35 dollars per share, for total proceeds of about 211 thousand dollars. The sale was carried out during Friday’s trading. These were restricted shares that vested this month, and he sold part of them through the blind sale. Shares of Airangy are rising after it signed a cooperation agreement with real estate company Hagag Europe to advance a project to design, build and operate commercial electricity storage facilities inside natural salt caverns in Romania. The project will rely on Airangy’s compressed-air energy storage technology in salt caverns (AirBattery), and will be developed in two stages to a capacity of about 25 MW and storage capacity of up to 5 GWh. The parties’ total estimated investment in the project is expected to be about 55 million euros.

11:15 The declines on the Tel Aviv Stock Exchange are intensifying. The Tel Aviv 35 Index is losing 0.8% and the Tel Aviv 90 Index is down about 0.3%. The Oil and Gas Index is down more than 1%, led by Isramco and Delek Group. The insurance index is falling 1.8%, led by Harel and Menora. Gallem shares are up about 2% on their first day on the exchange, with relatively small turnover of 94 thousand shekels. The company, controlled by FIMI of Ishay Davidi, completed its offering at a market value of 1.03 billion shekels. As part of the move, carried out as a secondary offering, the controlling shareholders, FIMI and Atidim, the old pension funds, sold shares for total proceeds of 303 million shekels. After the offering, FIMI continues to hold 29% of the company’s shares, it had planned to reduce its holding to 25%. The security and cleaning services company T&M is jumping 9% on its first trading day on the exchange, in relatively small turnover of 200 thousand shekels. The company raised 400 million shekels in the offering, half of which went to the company and the rest to controlling shareholders who sold in the offering, Shimon Tal Mor and others. The company is also using the offering proceeds to repay debts of about 80 million shekels.

10:30 Trading in Tel Aviv has turned lower. The Tel Aviv 35 Index is losing 0.5% and the Tel Aviv 90 Index is down about 0.2%. The banks index and the real estate and construction indices are weakening by 0.2%, and the Oil and Gas Index is down 0.3%. Teva, Ormat and Nice are leading the declines in the Tel Aviv 35 Index. Mega Or, ICL and Next Vision are rising by a little more than 1%.

10:05 The Tel Aviv Stock Exchange opened the trading day with slight gains, despite dual-listed shares returning from Wall Street with a large negative arbitrage gap of about 1.5%. The Tel Aviv 35 Index is up about 0.2%, while the Tel Aviv 90 Index is adding about 0.6%. The gains are led by the financials, insurance and banks indices, with increases of about 0.85. On the other hand, the Tel Aviv Yielding Abroad Index and the defense index are weakening by about 0.7% and 0.5%, respectively. Teva and Ormat are falling more than 4% at the open and are leading the declines in the Tel Aviv 125 Index.

8:30 1. Stock market The trading day is expected to open lower. Dual-listed shares are returning from Wall Street with a large negative arbitrage gap of about 1.5%, with Teva and Ormat standing out on the downside, with losses of more than 4%. Elbit and Enlight will weaken by more than 1%, and the dual-listed chip stocks Tower, Nova and Camtek will fall between 1% and 2%, despite the recovery recorded in the chip sector on Wall Street. It should be noted that yesterday too, the dual-listed shares came under pressure after returning from Wall Street with a negative arbitrage gap of about 1.5%, led by the dual-listed chip stocks. In Asia, trading is mostly positive this morning. The Tokyo stock exchange is up about 2%, the Hong Kong exchange is down about 0.4%, the Shanghai exchange is up about 0.6%, and the Seoul exchange is surging more than 7%, led by the chip stocks Samsung and SK Hynix, which are jumping about 9% and 12%, respectively. This, as noted, comes amid the recovery in the chip sector in the United States. At the same time, futures on Wall Street are up as much as 0.6% this morning. In the background, U.S. President Donald Trump referred during the night to the war against Iran and said, “We are negotiating now, and they want to reach a very good deal. They are willing to give us everything, they are willing to have no nuclear weapons... Over the next two weeks we will announce total victory. It will be total victory, it will happen very soon, and oil prices will plunge.” At the end of a volatile day, the Tel Aviv Stock Exchange closed yesterday with a mixed trend, after opening the day with sharp declines of more than 2%, against the backdrop of a plunge in dual-listed shares and the exchange of blows with Iran, which announced at midday that it would cease fire. The Tel Aviv 35 Index rose about 0.3%, while the Tel Aviv 90 Index lost about 1.1% of its value. The declines were led by the construction and dual-listed shares indices, down about 1.4% and 1%, respectively. On the other hand, the insurance index jumped about 2.2% after losing about 4% earlier in the day, while the financials and banks indices strengthened by about 1.3% and 0.9%, respectively. Standout on the downside was Delek Automotive, which fell after the company said it is expected to write off most of its investment in Hailo Technologies, which stood at about 197 million shekels at the end of the first quarter. This came after Hailo said it was having trouble completing a merger deal with a SPAC company, and also announced the layoffs of about 110 employees, about 50% of its workforce. Another stock that lost ground was the real estate company Tidhar Group, which fell about 1.3% on its first trading day on the local exchange. The construction developer completed its share offering on the exchange and will begin trading at a valuation of 8 billion shekels, post-money. In exchange for 19% of the company’s shares, Tidhar raised 1.7 billion shekels in the offering at a price of 155 shekels per share. Of the fundraising amount, 200 million shekels will not go to the company’s coffers, but to the pockets of Gil Geva, as well as Harel Insurance, which sold part of its shares and held 15% of the shares before the offering. Today, the shares of food ingredients and supplements company Gallem, controlled by FIMI of Ishay Davidi, are expected to begin trading in Tel Aviv after it completed its offering at a market value of 1.03 billion shekels. As part of the move, carried out as a secondary offering, the controlling shareholders, FIMI and Atidim, the old pension funds, sold shares for total proceeds of 303 million shekels. After the sale, FIMI will hold 29% of the company’s shares, it had planned to reduce its holding to 25%. On Wall Street, after the sharp declines recorded last Friday, the first trading day of the week ended mixed, with a recovery mainly in the chip sector. The Nasdaq advanced about 0.9%, the S&P 500 added about 0.3% and the Dow Jones weakened about 0.2%. While the S&P 500 saw some recovery, beneath the surface it was clear that market breadth, the share of stocks participating in the gains, remained low. According to FactSet data, toward the close of trading, 306 stocks in the S&P 500 were trading in the red, meaning more than 60% of the index’s constituent stocks fell. In fact, while the technology sector led the gains and strengthened by about 1.5%, eight of the 11 S&P 500 sectors ended the day in the red. The Philadelphia Semiconductor Index (SOXX) surged by a sharp 5.7% after plunging more than 10% on Friday and recording its weakest day in six years. Among the gainers were Micron, Nvidia, Broadcom and Marvell, along with many others. Intel shares surged sharply after a report on The Information said several chip companies, including Google and Nvidia, are turning to the company as their second manufacturing plant, given TSMC’s difficulty in producing enough manufacturing lines for the growing demand for AI chips. Shares of the chip company Cerebras, which went public last month in one of the largest IPOs on Wall Street in recent years, jumped nearly 20% after receiving a wave of buy recommendations from several major investment banks, including Barclays, Citibank, Morgan Stanley, UBS and others (see details under section 5). Among Israeli companies on Wall Street, internet company Wix updated downward its revenue growth forecast for this year, but left its free cash flow forecast unchanged, excluding costs related to acquisitions and reorganization at the company. Following the report, the stock fell in Wall Street trading to a more than nine-year low. As recalled, the company recently updated on layoffs of 20% of its employees, about 1,000 people, explaining this by the strengthening of the shekel against the dollar and developments in AI that require it to become a faster and leaner company. During the night, OpenAI announced that it had filed a confidential prospectus with the U.S. Securities and Exchange Commission, a first step toward a possible Wall Street listing. The move places the maker of ChatGPT alongside Anthropic, which also filed a confidential prospectus last week, while Elon Musk’s SpaceX is already at a more advanced stage after publishing a public prospectus ahead of an offering, at a valuation of about 1.8 trillion dollars, and is expected to start trading this Friday. According to estimates, OpenAI is currently worth more than 850 billion dollars, following a funding round completed earlier this year. At the same time, the company also plans to carry out a secondary tender offer that will allow employees to sell shares at the updated valuation, thereby providing liquidity to shareholders without waiting for an IPO.

2. Bond market In the government bond market, prices fell during most of the trading day, but toward the close the declines moderated, similar to the trend in the stock market, following reports of the end of the round of attacks from Iran. Despite the partial recovery, government bonds ended the day lower in price and with yields rising across the curve. The Tel Gov General Index weakened by about 0.2%, while the Tel Gov Shekel 10+ Index lost about 0.45%. In the U.S. debt market, government bond yields rose, especially at the longer end of the curve. This morning too, yields are posting slight gains, with the 10-year yield at 4.56%, while the 30-year yield stands at 5.03%. The trend comes amid tensions in the Middle East, as well as the faint expectations for a rate cut in the U.S. in the near term.

3. Commodities and currencies The dollar-shekel rate moved very sharply yesterday, against the backdrop of the brief exchange of blows between Israel and Iran. At the start of the day, the shekel weakened by more than 1% against the dollar and approached the 3-shekel mark. However, following Iran’s announcement of the end of attacks against Israel, it shifted to strengthening against the U.S. currency and reached a level of 2.91 shekels. Toward the end of the day, the dollar erased much of its losses globally and its continuous rate against the shekel was stable at 2.94 shekels. This morning, the shekel weakened slightly and its continuous rate stands at 2.93 shekels. Oil prices were also volatile yesterday. At the start of the day, they jumped sharply by about 5%, but following Iran’s announcement of a halt to the attacks, these gains moderated and ended the day with only slight increases. This morning, prices are edging lower, with Brent crude trading around 93 dollars a barrel and U.S. crude (WTI) around 90 dollars a barrel. Gold, which has been under heavy pressure recently, traded yesterday steadily around 4,360 dollars an ounce. This came after on Friday the precious metal fell below a significant support level of 4,443 dollars an ounce, its 200-day moving average. This morning, gold is edging down to 4,350 dollars an ounce. Veteran strategist Ed Yardeni estimates that gold’s next floor will be 4,000 dollars, but added that he remains bullish on the precious metal in the longer term and believes that when the war against Iran ends, its price will rise again. Yardeni’s price target for gold by the end of the year stands at 5,500 dollars an ounce, an upside of about 10% from its current price. It should be noted that the precious metal’s all-time intraday high, reached in January, stood at about 5,590 dollars an ounce. The recent pressure on gold is largely related to the fact that expectations for rate cuts in the U.S. have become faint, both because of the jump in energy prices, which pushed inflation higher, and because of U.S. employment data showing a stable labor market that does not need support. Since gold is an asset that does not pay interest, it tends to become less attractive in a high-interest-rate environment. In the crypto market, bitcoin recovered yesterday and rose about 3%. It is now trading around 63 thousand dollars per coin, after briefly breaking below the 60 dollar level per coin during the sharp declines in the stock market over the past weekend. Earlier today, it was reported that Strategy, the world’s largest corporate holder of bitcoin, disclosed that it bought 1,550 bitcoin last week for 101 million dollars. It should be noted that the negative sentiment in the crypto market also came after Strategy sold 32 coins worth about 2.5 million dollars to pay a dividend to holders of its preferred shares. Although the sale was only a tiny fraction of the company’s holdings, it marked its first bitcoin sale since December 2022 and came after many months in which chairman Michael Saylor had promoted a “buy and hold” approach.

4. Macro With the opening of the trading week and the brief escalation in the Middle East, Dr. Ilan Gildin, a hedge fund manager at Karni Family Office and the former economist of the Securities Authority, says that “regional geopolitical escalation is becoming a routine event” and that the situation is “very delicate and subject to spontaneous flare-ups.” According to him, the current flare-up found the markets at a sensitive point. Referring to the strong U.S. employment data, Gildin says they “put Fed Chair Kevin Warsh between a rock, an opposing Board of Governors, and a hard place, the White House, which does not want to hear about interest-rate hikes.” He also added that “the combination of a strong economy together with an immediate jump in energy prices due to the war creates double inflationary pressure.” It should be noted that tomorrow, Wednesday, the U.S. Consumer Price Index for May is expected to be published, and it is likely to have an important impact on the Federal Reserve’s interest-rate decision next Wednesday. After the index showed an annual increase of 3.8% in April, economists expect it to rise by about 4.2% in May. If the May index shows a larger-than-expected increase, this may strengthen expectations for higher interest rates for longer. In its weekly review, investment house Psagot referred to the split among Federal Reserve members, the most significant in several decades. The latest interest-rate decision was taken when there were four dissenters out of the 12 voting members, the most since October 1992. “Among the 12 members of the committee today, there are three clear hawks, Logan, Kashkari and Hammack, who already voted in April to give up the bias toward a rate cut. Hammack even recently emphasized that if current trends continue, ‘it may be appropriate to act soon,’” Psagot wrote. “On the other hand, there are also three clear doves, Bowman, Paulson and Williams. The remaining six members can be classified as ‘swing’ members, and Fed policy in the coming months depends on them. Of those, three, Cook, Jefferson and Waller, have said they would support a hike if inflation does not decline soon. All this leaves us with the understanding that as long as inflation does not indeed moderate, if only one of the remaining three, Warsh, Powell or Barr, leans hawkish, the hawks will already have a seven-vote majority and the decision to raise rates will get underway.” “What can prevent that? Obviously the first possibility is an agreement between the U.S. and Iran that will lead to lower oil prices,” Psagot added. “Another possibility is that Warsh will manage at the upcoming meeting to justify his choice as chair and convince the group of swing members to wait with the decision. If he succeeds in doing that until after the midterm elections, Trump will of course be very pleased.”

5. Outlook Shares of chip company Cerebras, which went public last month in one of the largest initial public offerings on Wall Street in recent years, jumped about 20% yesterday after receiving a wave of buy recommendations from several major investment banks, including Barclays, Citibank, Morgan Stanley, UBS and others. These large institutional firms essentially unveiled their research coverage on the stock after the quiet period following the IPO ended. It should be noted that the company’s stock, which competes in hardware with chip giant Nvidia, jumped nearly 70% on its debut day in New York. With the recent gain, the stock is up more than 30% since the beginning of the year, and its market value stands at about 53.7 billion dollars. The target prices given to the stock by analysts ranged from 250 dollars, a price not far from the current share price of 237 dollars, to 340 dollars, a level that represents upside of nearly 40%. Yahoo Finance reported that the main theme emerging from the new research reports is Cerebras’s absolute advantage in fast inference, the process of running AI models in real time. They added in the report that while traditional chip makers combine thousands of smaller graphics processors, Cerebras produces the Wafer-Scale Engine (WSE), the world’s largest computing chip. By keeping vast amounts of SRAM memory directly on a single piece of silicon, Cerebras eliminates latency bottlenecks that are common in traditional hardware configurations. At Morgan Stanley, which gave the stock a price target of 250 dollars, the most modest among those set by the other banks, analysts wrote that “as AI workloads become increasingly reasoning-intensive, demand for fast, low-latency inference is growing rapidly. This is a unique opportunity to invest in an AI processor company with a first-mover advantage over Nvidia, and it offers significant upside as the category develops.” The greatest optimism came from Citi, where the stock was given a price target of 340 dollars. Analyst Atif Malik wrote that “within the fast inference field, whose total addressable market is expected to reach 130 billion dollars by 2030, we expect Cerebras, leveraging its unique Wafer Scale technology and serving mainly OpenAI, AWS and others, to be the market leader and capture a 40% to 50% share of it. Following it will likely be Nvidia through its soon-to-launch LPX products, derived from its acquisition of Groq, and Google through its recently announced TPU platform.”