Stocks shoot skyward as Gaza deal amps Tel Aviv markets

Shares on the Tel Aviv Stock Exchange’s main indexes spike to new record highs as trading opens, driven by investor optimism over an agreement between Israel and the Hamas terror group to end fighting in Gaza and release all remaining hostages.

The benchmark TA-125 index gains 2.1 percent, marking the 38th time this year it hit a new record high, according to Tel Aviv bourse data. The index has soared almost 35% from the start of the year, hitting record highs over the past weeks over hopes the war may be coming to an end.

The TA-35 index of blue-chip companies rises 1.8%. The TA-90 index, which tracks the shares with the highest capitalization not included in the TA-35 index, increases 2.8%. The TA-Real Estate index leaps 4.2%, the TA-Insurance index is up 3.7%, and TA-Construction index gains 5.3%.

“These increases reflect a wave of optimism sweeping investors,” says Sarit Berman, head of research at the Tel Aviv Stock Exchange. “There are notable gains in the shares of real estate companies, amid expectations for prolonged security and economic stability.”

The shekel is also continuing to strengthen, appreciating some 0.8% against the greenback and trading at NIS 3.254 to $1, its strongest level since August 2022, according to Tel Aviv bourse data.

“Beyond the immediate improvement in market sentiment, the agreement has long-term economic implications, such as expanding and bringing closer the Abraham Accords and maximizing Israel’s economic benefits,” says Mizrahi Tefahot Bank chief markets economist Ronen Menahem. “Overall, this represents a further decline in the economy’s risk premium, which is of enormous importance to foreign investors.”

“A calmer security situation will make it easier for the Bank of Israel to consider lowering interest rates sooner than expected,” Menahem adds.