Israel's stock market remains resilient amid conflict with Iran, benchmark index TA-125 rises 1%

Iran-Israel conflict

Israel's stock market is nearing its record high levels, bucking expectations of a downturn following the escalations in conflict with Iran. Israel's benchmark index TA-125 rose nearly 1 percent on June 16 to hover around 2,736 in the afternoon.

The benchmark index had closed in the green in the previous session as well, right after the first round of missiles were shot by the two nations.

"This is proof of Israel's economic resilience — even under fire," Israel's Finance Minister Bezalel Smotrich said. "We are ready to respond and adapt as the situation evolves. The Israeli economy is strong, stable, and resilient," he added.

While Israel has reported some casualties as a result of Iran's strikes, the nation aims to remain open for business. Bank of Israel on Sunday said that the main branches of the nation’s lenders would remain open. "The Bank owns all necessary tools to support business continuity for the Israeli economy," it said.

Last week, Israel carried out what it called as "preemptive strikes" against Iran. Israeli Prime Minister Benjamin Netanyahu said the airstrikes were aimed at key parts of Iran's nuclear and military program. Iran retaliated by launching over 100 drones at Israel, raising concerns over a possible full-blown war in the oil-rich middle east.

The Israel-Iran conflict has now entered its fourth consecutive day. Israel recently struck Fordow nuclear facility in Iran, which triggered a 2.5-magnitude earthquake.

Notably, the continuing conflict in the Middle East has boosted gold and crude oil prices. However, analysts anticipated a much greater hike in the prices, and stronger negative impact on global stock markets.

"Interestingly there is no panic in equity markets. Markets will be severely impacted only if Iran closes the Strait of Hormuz triggering a huge spike in crude. This appears to be a low probability event now," VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited, said.

Indian stocks markets have also remained resilient to the shockwaves, with benchmark indices Sensex and Nifty rising nearly 1 percent each to hover around 81,773 and 24,936 respectively. "The Israel-Iran conflict adds a worrying new dimension to the Middle-East conflict, and represents a short-term risk to markets. The biggest pain point for India is the spike in crude oil prices which would hurt the CAD, fiscal, and inflation," said Emkay Global Financial Services in its latest report.

"We believe this impact is transitory as the fundamentals for crude prices remain weak due to energy transition and slowing growth in western economies. Foreign flows may also be affected, though that too would be short term," it added.

Also read: Our LIVE blog on stock market updates

(With inputs from Reuters)

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