Why Israeli Stocks Are Soaring Even as Iran Attacks the Stock Exchange?

Israeli stock market hits 52-week high despite Iran’s missile attack on the Tel Aviv Stock Exchange. Discover the surprising reasons behind this market rally amid war.

Overview: War and the Markets

On June 19, 2025, the world watched in disbelief as Iran launched a series of missile strikes targeting key Israeli infrastructure, including a direct hit on the Tel Aviv Stock Exchange building. Yet, in a twist that stunned analysts, Israel’s benchmark TA-35 index not only survived the attack—it surged to a 52-week high of 2,811.70, defying every conventional rule of market behavior in wartime.

So why are Israeli stocks soaring while missiles are falling?

Let’s break it down.

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📍 What Happened?

• Iran reportedly launched 25 ballistic missiles into Israeli territory in response to ongoing military tensions and airstrikes.

• The Tel Aviv Stock Exchange building sustained physical damage, though the exchange continued operations remotely.

• Other targets included a hospital in Beersheba and parts of central Tel Aviv.

• Despite the assault, the TA-35 and TA-125 indices rose, hitting fresh yearly highs.

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💡 5 Reasons Israeli Markets Are Rallying Amid War

1. Strong Domestic Institutional Support

Israeli pension funds, sovereign wealth vehicles, and large domestic investors are known for stabilizing market volatility. Even during periods of conflict, they continue to buy quality assets on dips, cushioning sharp declines and often fueling rallies.

“Institutional investors are trained for this—they buy when fear dominates headlines,” noted an Israeli market strategist.

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2. Operational Continuity and Resilience

Despite physical damage to infrastructure, trading systems, market data, and exchanges remained fully functional. Israel’s robust tech ecosystem and digital infrastructure allow seamless remote operations. Investors interpreted this as a signal of economic stability and resilience.

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3. Defense and Cybersecurity Stocks in Focus

As geopolitical threats escalate, defense and cyber companies like Elbit Systems, Rafael, and Check Point Software are seeing increased investor interest. The expectation of rising defense spending makes these companies highly attractive in the medium term.

Israel is considered a global leader in cybersecurity, and war increases global demand for its technology exports.

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4. Macro Fundamentals Remain Strong

• Israel’s GDP growth forecast for FY2025 remains above 3.5%

• Inflation is under control, and the central bank has paused rate hikes

• Israel’s tech, pharma, and energy exports are still robust, especially in gas

This economic strength offsets the fear of temporary military disruptions.

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5. Market Sentiment Buoyed by Global Support and Deterrence Capability

Investors are betting on Western diplomatic support, including U.S. mediation, and Israel’s strong retaliatory defense posture to prevent full-scale escalation. The belief that a prolonged war will be avoided has kept confidence intact in Israeli equities.

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📊 How Are Other Markets Reacting?

• Global markets dipped modestly on news of the Iranian missile strikes.

• Brent crude rose 2.3% over supply disruption fears in the Middle East.

• U.S. futures fell slightly, and gold prices jumped as a safe-haven play.

• However, regional ETFs and emerging market funds with Israeli exposure stayed resilient, reflecting optimism.

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🔍 Investor Insights: What to Watch