Israeli stocks surged Tuesday after Prime Minister Benjamin Netanyahu and U.S. President Donald Trump presented a joint plan in Washington to end the Gaza war, and following the Bank of Israel’s decision to leave interest rates unchanged.
The benchmark TA-35 index climbed 2.77%, the broader TA-125 rose 3% and the TA-90 jumped 4%. The banking sector led gains, with the TA-Banks index up 3.63%, driven by a 4.07% rise in Bank Hapoalim despite a large-scale employee strike. Insurance companies posted the sharpest gains: Menora rose 7.3%, Phoenix 7.36%, Clal Insurance 6.73%, Harel 6.39% and Migdal 5.61%.
The rally followed a volatile session on Monday, when early gains faded after the central bank’s rate announcement, leaving the TA-35 down 0.1%, the TA-90 off 0.6% and the TA-125 lower by 0.2%.
On Monday evening, Trump and Netanyahu declared at the White House that the Israeli leader supported a U.S.-backed framework to end the war in Gaza and secure the release of hostages.
“The day began with modest gains and hesitancy regarding the deal but ended in strong optimism after the statements that accompanied trading,” said Yaniv Pagot, deputy head of trading at the Tel Aviv Stock Exchange. He noted that the TA-125 closed at a record high despite a soft opening on Wall Street, reflecting “a distinctly local trend.”
The bond market also strengthened, with a 27-year government bond gaining 1%, signaling reduced investor perception of long-term risk in Israel’s debt. The shekel rose 0.5% against the dollar, extending its appreciation to about 9% since the start of the year.
Turnover was unusually high at 5.4 billion shekels (about $1.4 billion), nearly double the daily average, which Pagot said showed investors repositioning portfolios in response to political developments.
Looking ahead, traders remain cautious about exposure to Israeli assets. “Caution is justified, as Hamas’ response to the proposal is still unknown, and Israelis have seen many disappointments,” Pagot said. “If the positive scenario materializes, it will have major economic implications, reflected in future interest rate policy and the state budget.”