Israel is facing down regional turmoil with missiles in the sky—and record numbers on the stock ticker.
Markets in Tel Aviv are not just holding up under the pressure of conflict with Iran. They’re booming. The Tel Aviv Stock Exchange’s key indexes surged to all-time highs this week, surprising analysts, puzzling skeptics, and fueling a new narrative about wartime investor psychology.
It’s not the first time conflict and capital gains have crossed paths. But the scale of this rally, set against images of bunker busters and diplomatic fallout, has traders and economists asking: What exactly are investors betting on?
Tel Aviv Stock Indexes Break Records Despite Escalation
On Sunday, the TA-125 index climbed 1.3% and the TA-35 index advanced 1.2% in early trading—just a day after U.S. forces struck nuclear targets inside Iran. That wasn’t a one-off blip. Last week marked the best stretch for Israeli stocks since the early pandemic bounce in May 2020.
In fact, 38 of the 55 indices tracked by the TASE reached new peaks.
For a country under what many would describe as constant alert, this market behavior feels… off-script. Or maybe not, depending on who you ask.
Matthew Salter, who previously headed trade for the UK Embassy in Tel Aviv, put it bluntly: “It’s almost unreal, honestly. You’d expect chaos, not capital gains.”
Shekel Roars as Foreign Demand Builds
Adding more confusion to the mix—the Israeli shekel was the world’s best-performing currency last week.
It rose nearly 3.6% against the dollar, driven by foreign inflows into Israeli assets and a growing sense among investors that the conflict may be nearing a resolution—or at least, entering a manageable phase.
Some analysts say it’s the classic “buy on fear, sell on relief” cycle flipped on its head. Others believe the war could be pushing Israeli tech and defense stocks into a new stratosphere.
One banker in Ramat Gan said the mood in financial circles is strange: “It’s like everyone’s playing musical chairs while air-raid sirens go off. But nobody wants to be the one who left the party too early.”
Political Gambles, Market Bets
Investors are also looking across the border at Tehran—and seeing signs of instability that could, paradoxically, reduce the threat to Israel in the long run.
There’s growing chatter about potential political shifts in Iran, following internal discontent and heavy losses after U.S. strikes. That speculation, thin as it may be, has bolstered bullish bets in Tel Aviv.
But rating agencies aren’t so easily swayed.
S&P and Moody’s have issued cautionary notes about the long-term risks tied to the conflict, particularly if it grinds on for months. And yet, Israeli markets seem unbothered.
Here’s a quick look at what’s moving:
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TA-Banks5 index is up 2.7% this week
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TA-Tech Elite climbed nearly 3% over five sessions
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Defense contractor Elbit Systems jumped 6.2% in a single day
That kind of movement doesn’t happen unless someone’s placing big bets.
What the Data Shows: Growth Amid Gunfire?
To put this moment in context, here’s a table showing key economic and financial figures from Israel over the past four weeks:
| Indicator | Value (Latest) | Change Since May |
|---|---|---|
| TA-125 Index | 2,066 | +10.4% |
| Shekel/USD exchange rate | 3.28 | +3.6% |
| Foreign Exchange Reserves | $201 billion | +1.1% |
| Unemployment Rate | 3.8% | No Change |
| Inflation Rate (Annualized) | 2.6% | Down 0.3% |
One sentence here: Traders are watching these numbers like hawks.
The Tech and Defense Play That’s Driving Optimism
Dig a little deeper and you’ll see most of the market momentum is coming from sectors seen as “conflict-resilient.” Namely, defense and tech.
Israel’s global reputation in cybersecurity, drone technology, and missile defense has become its investment calling card during wartime. The Iron Dome isn’t just a military asset—it’s a business moat.
Several analysts expect quarterly earnings from listed defense firms to blow past estimates. One fund manager compared it to the early 2000s U.S. boom in security stocks after 9/11. “There’s war demand. And then there’s war-adjacent demand. Israel has both.”
Meanwhile, tech startups with AI tools for battlefield intel and logistics are reportedly seeing huge interest from venture funds and sovereign wealth portfolios.
Is the Optimism Premature or Just Inevitable?
Not everyone’s popping champagne. A few cautious voices are calling this rally “emotionally blind.” They argue the markets are brushing off the risk of regional escalation far too casually.
“Tel Aviv may be flying high, but the fundamentals don’t change overnight,” warned a JP Morgan strategist in a note sent Monday. “If oil spikes or diplomacy breaks down, this rally could unravel just as fast.”
Still, some are shrugging off those warnings as noise. If markets are part-logic and part-sentiment, then right now, sentiment’s wearing a flak jacket and running full speed toward risk.
One local investor summed it up over espresso in central Tel Aviv: “Maybe the markets don’t care that there’s a war. Or maybe, for once, they understand it better than the diplomats.”
