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Yomiuri Shimbun
an hour ago
- Business
- Yomiuri Shimbun
Israeli Markets Rally as Investors Sketch Post-Iran Conflict Landscape
Reuters Part of an electronic board displaying market data is seen at the Tel Aviv Stock Exchange, in Tel Aviv, Israel November 4, 2020. Picture taken November 4, 2020. JERUSALEM/LONDON, June 16 (Reuters) – Israel's shekel jumped sharply and stocks and bonds gained on Monday as investors began to look beyond the escalating conflict with Iran and shape a more favorable long-term risk assessment for the country's assets. The shekel ILS= traded at 3.50 to the dollar by 1642 GMT, 3.6% stronger on the day and scoring its best performance since October 9, 2023, when the central bank heavily intervened to shore up the currency following the outbreak of the Gaza war. The Israeli currency had rallied as much as 4.6% earlier in the session, snapping a four-day losing streak and clawing back hefty losses suffered last week when rumors of an Israeli attack on Iran intensified. Israel launched its biggest-ever military strike against its longstanding enemy early on Friday. The main Israeli share indices also gained, with the broad Tel Aviv 125 index .TA125 closing 2.6% higher and extending Sunday's gains of some 0.5%. The rise followed a weekend of punishing Israeli attacks on Iranian nuclear facilities, ballistic missile factories and military commanders, which were met with retaliatory Iranian strikes against Israel. 'The reaction of the local markets … perhaps reflects the assessment that in certain scenarios this war may be a catalyst for a new status quo in the region,' said Bank Hapoalim chief economist Victor Bahar. Israeli officials have said the conflict will take time and will not end until the Iranian nuclear threat is removed. Tehran denies it wants to build nuclear weapons. Middle East tensions have been rising since the war in Gaza erupted 20 months ago after Hamas-led and Iranian-backed militants stormed into southern Israel and took 251 hostages and killed 1,200 people, most of them civilians. Israel's military campaign since has killed nearly 55,000 Palestinians, most of them civilians, according to health authorities in Gaza. Fighting between Israel and Tehran's proxies such as Hezbollah in Lebanon and the Houthis in Yemen has also intensified. 'Most of these (proxies) have been destroyed or weakened, but Iran's nuclear weapon program has remained a long-term existential threat for Israel,' said Leader Capital Markets chief economist Jonathan Katz. 'Delaying this program significantly – and maybe a credible commitment from Iran to forgo high-level nuclear enrichment – will reduce Israel's geopolitical risk premium markedly.' Israel's international bonds as well as its credit default swaps – a proxy for insurance against risk of default – both regained ground on Monday. The 2120 maturity added more than 1.5 cents to bid at 67.07 cents on the dollar, Tradeweb data showed, around 1 cent below levels seen last Wednesday when reports of a potential imminent attack emerged. Israel's five-year credit default swap also dropped sharply to 108 basis points from Friday's close of 122 bps. At a domestic bond auction on Monday, Israel sold 2.75 billion shekel ($785 million) of various debt maturities in a sale that was multiple times oversubscribed. Israel's economic performance and the macroeconomic pressures it faces have been choppy in recent years. Data on Sunday showed the inflation rate eased more than expected to 3.1%, though the central bank is expected to remain cautious. The derivatives market is pricing in an interest rate cut in mid-2026. Earlier on Monday, first-quarter economic growth was revised up to an annualized 3.7% from 3.4%.
Reuters
9 hours ago
- Business
- Reuters
Israeli markets rally as investors sketch post-Iran conflict landscape
JERUSALEM/LONDON, June 16 (Reuters) - Israel's shekel jumped sharply and stocks and bonds gained on Monday as investors began to look beyond the escalating conflict with Iran and shape a more favourable long-term risk assessment for the country's assets. The shekel traded at 3.50 to the dollar by 1642 GMT, 3.6% stronger on the day and scoring its best performance since October 9, 2023, when the central bank heavily intervened to shore up the currency following the outbreak of the Gaza war. The Israeli currency had rallied as much as 4.6% earlier in the session, snapping a four-day losing streak and clawing back hefty losses suffered last week when rumours of an Israeli attack on Iran intensified. Israel launched its biggest-ever military strike against its longstanding enemy early on Friday. The main Israeli share indices also gained, with the broad Tel Aviv 125 index (.TA125), opens new tab closing 2.6% higher and extending Sunday's gains of some 0.5%. The rise followed a weekend of punishing Israeli attacks on Iranian nuclear facilities, ballistic missile factories and military commanders, which were met with retaliatory Iranian strikes against Israel. "The reaction of the local markets ... perhaps reflects the assessment that in certain scenarios this war may be a catalyst for a new status quo in the region," said Bank Hapoalim chief economist Victor Bahar. Israeli officials have said the conflict will take time and will not end until the Iranian nuclear threat is removed. Tehran denies it wants to build nuclear weapons. Middle East tensions have been rising since the war in Gaza erupted 20 months ago after Hamas-led and Iranian-backed militants stormed into southern Israel and took 251 hostages and killed 1,200 people, most of them civilians. Israel's military campaign since has killed nearly 55,000 Palestinians, most of them civilians, according to health authorities in Gaza. Fighting between Israel and Tehran's proxies such as Hezbollah in Lebanon and the Houthis in Yemen has also intensified. "Most of these (proxies) have been destroyed or weakened, but Iran's nuclear weapon program has remained a long-term existential threat for Israel," said Leader Capital Markets chief economist Jonathan Katz. "Delaying this program significantly - and maybe a credible commitment from Iran to forgo high-level nuclear enrichment - will reduce Israel's geopolitical risk premium markedly." Israel's international bonds as well as its credit default swaps - a proxy for insurance against risk of default - both regained ground on Monday. The 2120 maturity added more than 1.5 cents to bid at 67.07 cents on the dollar, Tradeweb data showed, around 1 cent below levels seen last Wednesday when reports of a potential imminent attack emerged. Israel's five-year credit default swap also dropped sharply to 108 basis points from Friday's close of 122 bps. At a domestic bond auction on Monday, Israel sold 2.75 billion shekel ($785 million) of various debt maturities in a sale that was multiple times oversubscribed. Israel's economic performance and the macroeconomic pressures it faces have been choppy in recent years. Data on Sunday showed the inflation rate eased more than expected to 3.1%, though the central bank is expected to remain cautious. The derivatives market is pricing in an interest rate cut in mid-2026. Earlier on Monday, first-quarter economic growth was revised up to an annualised 3.7% from 3.4%. ($1 = 3.5017 shekels)
Business Standard
11 hours ago
- Business
- Business Standard
Israeli markets rally as investors sketch post-Iran conflict landscape
Israel's shekel jumped sharply and stocks and bonds gained on Monday as investors began to shape a more favourable risk assessment for country's assets in the face of an escalating conflict with Iran. The shekel strengthened more than 4.5per cent against the dollar in its biggest daily gain since at least 2008, snapping a four day losing streak and clawing back hefty losses suffered last week since rumours of an Israeli attack on Iran intensified. Israel launched its operation early on Friday. The main Israeli share indices also gained, with the broad Tel Aviv 125 index up 1.9per cent in afternoon trade, extending Sunday's gains of some 0.5per cent following a weekend of punishing Israeli attacks on Iranian nuclear facilities, ballistic missile factories and military commanders that were met with Iranian strikes against Israel. "The reaction of the local markets ... perhaps reflects the assessment that in certain scenarios this war may be a catalyst for a new status quo in the region," said Bank Hapoalim Chief Economist Victor Bahar. Israeli officials have said the conflict will take time and won't end until the Iranian nuclear threat is removed after launching its biggest-ever military strike against its longstanding enemy on Friday. Tehran denies it wants to build nuclear weapons. But tensions in the region have been on the rise since the war in Gaza erupted 20 months ago after Hamas-led and Iranian backed militants stormed into southern Israel. Fighting with Tehran's proxies such as Hezbollah in Lebanon and the Houthis in Yemen has intensified. "Most of these (proxies) have been destroyed or weakened, but Iran's nuclear weapon program has remained a long-term existential threat for Israel," said Leader Capital Markets Chief Economist Jonathan Katz. "Delaying this program significantly - and maybe a credible commitment from Iran to forgo high level nuclear enrichment - will reduce Israel's geopolitical risk premium markedly." Israel's international bonds as well as its credit default swaps - a proxy for insurance against risk of default - also saw gains on Monday but have yet to offset recent losses. The 2120 maturity added more than 1.3 cents to bid at 66.88 cents on the dollar, Tradeweb data showed - still more than 1 cents below levels seen last Wednesday when reports of a potential imminent attack emerged. Israel's economic performance and the macroeconomic pressures it faces have been choppy in recent years. Data on Sunday showed the inflation rate eased more than expected to 3.1per cent. Though the central bank is expected to remain cautious and hold interest rates - possibly until early 2026. Derivatives market is now pricing in a rate cut in mid-2026. Earlier on Monday, first-quarter economic growth was revised up to an annualised 3.7per cent from 3.4per cent.
Reuters
22-05-2025
- Business
- Reuters
Bank of Israel to keep rates on hold after April inflation jump
JERUSALEM, May 22 (Reuters) - The Bank of Israel is expected to leave short-term interest rates unchanged at its policy meeting next week after inflation accelerated last month amid economic uncertainty exacerbated by Israel's war against Palestinian militant group Hamas. All 14 economists polled by Reuters said they expected the central bank to keep its benchmark rate (ILINR=ECI), opens new tab at 4.5% when the decision is announced on Monday at 4 p.m. (1300 GMT). Israel's annual inflation rate accelerated to 3.6% in April - against an expected slowdown to 3.1% from 3.3% in March - above its 1-3% target. Much of the April gain stemmed from a spike in airfares, though inflation has been underpinned through the year by price gains in a host of goods including water and electricity, as well as some taxes that rose at the start of 2025. The government also partly blames war-related supply issues for sticky inflation. "The Bank of Israel is currently closer to the Fed than to the European banks - that is, in a wait-and-see position," Bank Hapoalim economist Victor Bahar said. "Israel's monetary policy will be fairly coordinated with the Fed, assuming that the tariffs in the U.S. will not remain in place for long." Based on bond yields, financial markets still expect inflation to ease to 1.8% in the coming year, according to Bank of Israel data, as well as two rate cuts later in 2025 as projected by the central bank's own economists. "The Bank of Israel will leave policy unchanged until it has significantly more conviction that loosening will not reignite inflation," said Citi economist Michel Nies, citing the tough task of a cooling labour market where the supply of jobs is constrained. Goldman Sachs' Johan Allen said that the central bank may look past the higher airfares "if there is continued disinflation across other core categories". One bright spot for inflation has been a stronger shekel , which has gained 1% against the dollar over the past month. At the same time, Israel's economy grew an annualised 3.4% in the first quarter from the prior three months. Nies, who foresees rate cuts resuming in November and accelerating in 2026 to a 3% rate, noted that policymakers "might need to maintain GDP growth below potential for longer in order to realign demand with the new supply reality."
Reuters
02-04-2025
- Business
- Reuters
Bank of Israel to keep rates unchanged as Gaza conflict resumes
Summary Companies Rates decision due on Monday at 1300 GMT All 14 economists polled by Reuters see no move this month Inflation rate slipped to 3.4% in Feb, but above 1%-3% target Israel economy grew 0.9% in 2024 as Gaza war weighed JERUSALEM, April 2 (Reuters) - The Bank of Israel is expected to leave short-term interest rates unchanged at a policy meeting next week, likely staying cautious after the Israeli military's resumption of strikes in Gaza and Lebanon. All 14 economists polled by Reuters said they expected the central bank to keep its benchmark rate (ILINR=ECI), opens new tab at 4.5% when the decision is announced on Monday at 4 p.m. (1300 GMT). The Reuters Tariff Watch newsletter is your daily guide to the latest global trade and tariff news. Sign up here. While February inflation data were lower than market expectations, "an increase in geopolitical and domestic tensions will keep the Bank of Israel on the prudent side," said Morgan Stanley economist Alina Slyusarchuk, expecting the key interest rate to end 2025 at 4%. Israel's annual inflation rate eased to 3.4% in February from 3.8% in January but remained about its 1-3% target. Inflation has stayed high due to price gains on a host of goods including water and electricity, as well as some taxes that rose at the start of 2025. The government also partly blames war-related supply issues for sticky inflation. Hurt by the wars against Hamas in Gaza and Hezbollah in Lebanon, Israel's economy grew 0.9% in 2024 and is expected to grow 3.4% this year, according to OECD estimates issued on Wednesday. It also projects inflation at 3.7% this year and recommended policymakers hold the line on rates until price pressures were contained. Central bank officials have said they expect inflation to ease in the second half of the year and hope to lower rates once or twice in 2025. But "markets have postponed the expected timing of the next rate cut in light of elevated risks," said Bank of Israel Chief Economist Victor Bahar, citing Israel's rising risk premium. He noted that the derivatives market is only pricing in one rate reduction this year. Israel's high risk premium had fallen sharply since Israel agreed a U.S.-backed ceasefire deal in January with Palestinian militant group Hamas, whose attack on October 7, 2023 triggered the war, but has risen again as the ceasefire deals could be in jeopardy. After two months of relative calm, Israel resumed airstrikes on Gaza last month and sent ground troops back when the two sides failed to agree on the next stage of the ceasefire. On Wednesday, Israel announced a major expansion of military operations in Gaza. An Israeli airstrike on Tuesday killed four people including a Hezbollah official in Beirut's southern suburbs, further testing a shaky ceasefire between Israel and Iran-backed Hezbollah in Lebanon.
