Israeli markets closed Thursday, December 23, with a measured and selective tone as investors navigated the final stretch of the year. Equity indices posted modest gains overall, led by blue chips and mid-caps, while the banking segment showed mild weakness. At the same time, the bond market strengthened, underscoring a cautious but constructive backdrop as participants balance risk and defense into year-end.

TA-35 Holds Firm as Large Caps Consolidate Near Highs

The TA-35 finished up 0.07% at 3,711.25 points, reflecting a session of consolidation rather than directional conviction. Market breadth was nearly even, with 18 advancers and 17 decliners, indicating a market that is pausing to digest recent gains. Equity turnover reached approximately ₪2.55 billion, highlighting continued institutional participation even as price action remained subdued. Large-cap performance suggests investors remain comfortable holding core positions but are reluctant to aggressively add exposure at current levels. This behavior is typical for late-December trading, where liquidity remains healthy but risk-taking becomes more selective. The TA-35’s ability to hold above recent breakout levels points to underlying support, even as momentum cools.

Mid-Caps Advance While Banks Underperform

The TA-90 index rose 0.31% to 3,814.82, supported by a modestly positive breadth profile. Mid-cap stocks continue to attract interest, particularly among domestically oriented companies that benefit from stable local demand and ongoing liquidity. Trading volume in the segment was lighter than large caps, reflecting selective accumulation rather than broad-based buying. In contrast, the TA-90 and Banks index slipped 0.29%, signaling mild pressure on financial shares. While breadth in the banking segment was evenly split, the negative index performance suggests some profit-taking or short-term caution following earlier strength. Investors appear to be reassessing near-term catalysts for banks, including credit growth dynamics and margin outlooks, without signaling a broader shift away from the sector. The broader TA-125 index added 0.12%, supported by gains in large caps and select mid-caps. However, the TA-125 Value index declined 0.67%, indicating rotation away from value stocks after recent outperformance. This divergence suggests that investors are fine-tuning exposure rather than reducing risk wholesale. The TA Sector-Balance index rose 0.16%, reinforcing the view that performance was mixed across sectors but generally stable.

Bond Market Strengthens as Defensive Allocations Persist

The bond market delivered another positive session, reinforcing its role as a stabilizing force alongside equities. The All-Bond General index gained 0.06%, supported by strong breadth with advancers significantly outnumbering decliners. Bond-market turnover exceeded ₪3.09 billion, signaling active allocation decisions rather than passive holding. Short-term bonds rose 0.02%, continuing to attract investors seeking low-volatility exposure and liquidity preservation. Inflation-linked bonds also advanced, with Tel Bond-Linked A up 0.14% and Tel Bond 60-Linked rising 0.09%. These gains point to steady inflation expectations and continued demand for real-return instruments as investors hedge uncertainty into early 2026. The combination of rising bond prices and modest equity gains suggests a balanced risk environment, where portfolios are being managed for resilience rather than maximum return.

Looking ahead, the market’s narrow gains and selective rotations indicate a transition from rally mode to consolidation as the year draws to a close. Investors will be watching global interest-rate expectations, bond yield movements, and geopolitical developments for cues on early-2026 positioning. Opportunities may persist in quality large caps and selectively in mid-caps if liquidity remains supportive, while bonds are likely to continue playing a central defensive role. Risks include thin holiday liquidity, profit-taking after recent advances, and sudden shifts in global sentiment. Monitoring market breadth, sector leadership, and the equity–bond relationship will be critical in assessing whether Israeli markets can resume stronger momentum in the new year.