Israel's TA 35 Jumps 3.06% on US Fiscal Catalyst
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Fazen Markets Editorial Desk
Collective editorial team · methodology
ta-35israel-stocks
Fazen Markets Editorial Desk
Collective editorial team · methodology
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The TA 35, Israel's primary stock market benchmark, closed 3.06% higher on Monday, 25 May 2026. The move marks the index's most significant single-day gain since June 2025. This rally was catalyzed by a US congressional announcement regarding a substantial new fiscal package for defense and technology cooperation with Israel and other regional partners. Investing.com reported the index's closing level at 14:55 UTC.
The rally arrives during a period of global monetary policy divergence, with the Bank of Israel's benchmark rate at 4.75% and the US Federal Reserve holding at 5.25%. The last comparable single-day gain for the TA 35 was a 3.8% surge on 14 June 2025, following a breakthrough in regional diplomatic talks. The immediate catalyst is the passage of the US-Israel Strategic Technology and Defense Act, a $28 billion package. The legislation includes direct funding for joint missile defense projects and grants for technology startups in cybersecurity and agriculture.
Historical precedent shows Israeli equities are highly sensitive to US fiscal policy shifts. A similar 2.9% single-day gain occurred on 8 March 2024 after the US Congress approved supplemental wartime funding. The current package's focus on dual-use technology, applicable in both defense and commercial sectors, has broadened the market's positive reaction beyond pure defense contractors. This has amplified buying activity across the Tel Aviv Stock Exchange.
The TA 35 index closed at 1,842.70 points, a gain of 54.75 points from the prior session's close of 1,787.95. Trading volume surged to 2.8 billion NIS, 45% above the 30-day average of 1.93 billion NIS. The index's year-to-date performance turned positive, moving to +1.2% from a -1.8% deficit before the rally. In contrast, the S&P 500 is up 8.4% year-to-date, while the MSCI Emerging Markets Index is down 2.1%.
Leading the advance were major defense and technology constituents. Elbit Systems Ltd. (ESLT) gained 7.2%, adding approximately $420 million to its market capitalization. CyberArk Software Ltd. (CYBR), a global cybersecurity leader headquartered in Israel, rose 5.8%. The banking sector, represented by Bank Leumi (LUMI), posted a more modest gain of 1.9%. The Israeli Shekel strengthened 0.4% against the US dollar following the news, trading at 3.65.
| Constituent | Price Change | Sector |
|---|---|---|
| Elbit Systems (ESLT) | +7.2% | Defense/Aerospace |
| CyberArk (CYBR) | +5.8% | Technology |
| Nice Ltd. (NICE) | +4.1% | Technology |
| Bank Leumi (LUMI) | +1.9% | Financials |
The direct beneficiaries are clear: defense primes like Elbit Systems and Rafael Advanced Defense Systems see immediate order book visibility from the legislation's procurement clauses. Technology firms specializing in cybersecurity, autonomous systems, and agricultural tech stand to gain from non-dilutive grant funding and enhanced US market access. This explains the outsized moves in CyberArk and Nice Ltd. compared to the broader index.
A key risk is execution and disbursement timing. The fiscal package authorizes funds but does not guarantee immediate expenditure; actual contract awards may lag by several quarters. the rally concentrates gains in large-cap, internationally-focused firms, potentially widening the performance gap with small and mid-cap domestic companies. Institutional flow data from the Tel Aviv Stock Exchange indicates net buying by foreign funds, particularly from the US and UK, reversing a three-week trend of outflows.
Hedge funds with dedicated Israel or emerging Europe mandates are increasing long exposure to the technology sector. Short covering was evident in heavily shorted small-cap technology names. The flow suggests a reassessment of Israeli equity risk premia, with investors pricing in lower geopolitical discount due to reinforced US security commitments. Learn more about analyzing sector flows on Fazen Markets.
The next major catalyst is the Bank of Israel's interest rate decision scheduled for 9 June 2026. Analysts will watch for any guidance linking monetary policy to the expected economic stimulus from the US aid package. Second, the quarterly earnings season begins in mid-July, with Elbit Systems reporting on 22 July; commentary on new order intake will validate the rally's fundamentals.
Technical levels are critical. The TA 35 must hold above its 200-day moving average, currently at 1,815, to sustain the bullish breakout. A close above 1,865 would target the year-to-date high of 1,902. Conversely, a failure to hold 1,815 could signal a false breakout. Watch the 10-year Israeli government bond yield, currently at 5.2%; a significant decline would signal expectations for stronger growth and subdued inflation.
Elbit Systems Ltd. (ESLT) and Rafael Advanced Defense Systems are the primary contractors for missile defense systems like Iron Dome and David's Sling, which receive co-funding from the United States. These firms derive over 60% of their annual revenue from international sales, with the US Department of Defense being their largest single customer. The new package specifically allocates funds for missile defense interceptor procurement and next-generation system development.
The TA 35's 3.06% gain significantly outpaced regional peers on 25 May. Saudi Arabia's Tadawul All Share Index (TASI) closed flat, while Egypt's EGX 30 gained 0.8%. The divergence highlights Israel's unique integration into Western technology and defense supply chains, unlike the commodity-driven markets of the Gulf. Israel's equity market is also more sensitive to changes in global risk sentiment and US fiscal policy than its regional neighbors.
The TA 35 has exhibited higher volatility than major developed market indices like the S&P 500, largely due to geopolitical risk premiums. Its 30-day historical volatility averaged 18% over the past year, compared to 12% for the S&P 500. However, during periods of stable regional relations and strong global tech performance, this volatility premium can compress, as seen in 2021 when the index outperformed global peers by over 15%.
The TA 35's surge reflects a repricing of Israeli equities based on concrete US fiscal support, with flows targeting defense and export-oriented technology leaders.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
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