Israeli stocks reach record highs after US bombs Iranian nuclear sites

After the Trump administration decided to bomb three of Iran’s key nuclear facilities, Israeli stocks hit record highs.

“The broad Tel Aviv 125 index closed 1.8% higher, extending gains to nearly 8% the past week, while the blue-chip TA-35 gained 1.5%,” Reuters reported on Sunday.

The significant increase reflects the belief among investors that the U.S. strikes on Iran will ultimately be economically beneficial for Israel.

Ronen Menachem, chief markets economist of Israel’s third-largest bank Mizrahi Tefahot, told Reuters that “the destruction of Iran’s key nuclear facilities by the US military is, of course, a positive development ... in terms of improving the regional security environment and reducing Iran’s military and nuclear capabilities.”

While Israel’s stock market has spiked, the global market has not done so, as investors wait to see how Iran will respond to the U.S. strikes, and whether the conflict will escalate into a larger war.

According to CNBC, “investors are largely shrugging off the escalation” for now, “with many strategists believing the conflict to be contained.”

This is likely to change, however, if Iran closes the Strait of Hormuz, through which much of the world’s oil is transported.

“If they do, oil prices go north of $100, fear and panic take over, stocks go down ~10% minimum, and investors rush to safe havens,” said Marko Papic, Macro-Geopolitical Chief Strategist at BCA Research.

While the Iranian parliament voted to close the Strait of Hormuz on Sunday, the decision to do so ultimately lies with the Iranian Supreme Leader Ayatollah Khamenei and the Supreme National Security Council.

U.S. Secretary of State Marco Rubio said that, should Iran close the strait, “it will be economic suicide for them.”

Rubio also noted that doing so would harm China, which Iran considers an ally.

“I encourage the Chinese government in Beijing to call them about that, because they heavily depend on the Straits of Hormuz for their oil,” he said.