The financial markets in Israel have in recent days been behaving as if they know something we don’t. With the ceasefire between Israel and Hamas set to begin on Sunday, the shekel is strengthening, and the stock market gains suggest hopes that go far beyond an end to the fighting in Gaza.Market sources are optimistic about broader regional moves, including the possibility of renewed talks with Saudi Arabia, which could transform the Middle East.In the past five trading days, while the US stock markets have been falling, the Tel Aviv Stock Exchange (TASE) has risen on most days. In addition, the dollar has strengthened sharply against the world’s major currencies, but the shekel is one of few currencies to show a positive return against the US currency.In fact, apart from the ruble, the shekel has been the world’s strongest currency in terms of recent gains.Over the past few months, hopes of a hostage-ceasefire deal have risen time and time again, only to be dashed again and again. So, the market reacted with nervousness and strong volatility. As the talks progressed, the TASE rose and the shekel strengthened. When the talks broke down, we often saw the opposite trend. The Stock Market. Illustration (credit: freepik)In the current cycle of talks, it is a bit different. Until Tuesday morning, the fluctuations in the shekel and the stock market were moderate. Only when it seemed that the talks were in the final stages did the shekel strengthen by more than 1% against the dollar, and the TASE rise by a similar amount.Why? The Israeli economy is reaching this moment from a stronger position. The last quarter of 2024 brought with it record TASE performances that surpassed even the leading indices on Wall Street, and the shekel strengthened to NIS 3.62/$ – significantly stronger than before the war.However, a look at the yield spreads on government bonds traded in dollars and the CDS index reminds us that the risks have not yet completely passed. The risk premium has indeed fallen, but it is still very high compared with before the war.Analysts’ viewsA market trader told Globes that the trigger for the current shekel appreciation is indeed the imminent ceasefire agreement, but he is less optimistic.AdvertisementAccording to him, investors around the world are pricing in several steps forward, such as political changes in Israel or a possible agreement with Saudi Arabia. “There are several articles published in Bloomberg about the supposed renewal of contacts with Saudi Arabia, so the market is running with dreams of a new Middle East. In my opinion, foreigners are having a hard time understanding the geopolitical situation, and are not taking into account the constitutional story that tore the country apart in 2023.” Stay updated with the latest news! Subscribe to The Jerusalem Post Newsletter Subscribe Now More Mutual Funds CEO and CIO Yotav Costica agrees that the market
Ven. Gen 17th, 2025
