Tel Aviv Stock Exchange to Open Sunday as Scheduled Amid War Tensions with Iran

Following a situation assessment held Sunday evening between Finance Minister Bezalel Smotrich and Israel Securities Authority Chairman Adv. Sefi Singer, it was decided that trading on the Tel Aviv Stock Exchange (TASE) will proceed as scheduled on Monday, despite the escalating conflict with Iran.

The decision was made in full coordination with the Home Front Command, to maintain economic resilience and continuity amid security concerns. All operations will adhere to Home Front guidelines.

On Friday, U.S. stock exchanges closed with significant declines, reflecting heightened geopolitical anxiety.

• S&P 500 fell 1.1%

• Nasdaq dropped 1.3%

The war between Israel and Iran erased last week’s market gains, with investors fleeing risk assets in favor of safe havens. Gold, oil, and the U.S. dollar all rose in response to the instability. The 10-year U.S. Treasury bond yield slipped to 4.4%, and some traders increased their short positions on U.S. indices.

A senior bond trader remarked: “If this conflict continues, we’ll see a prolonged drop in risk appetite.”

Pessimism Expected to Dominate TASE Opening

Although Israel’s bold military operation on Thursday initially boosted sentiment, Iran’s powerful retaliatory strikes over the weekend dampened optimism. The expectation is that TASE will open under pressure, reflecting concerns about the real economic damage sustained from Iranian missile attacks.

Iran’s ballistic missiles — far more destructive than those from Hamas or the Houthis — have already hit residential areas and infrastructure, raising fears about future economic fallout. Strategic facilities, factories, and critical infrastructure are now considered vulnerable.

Economic Risk Grows

Traders are increasingly concerned about Israel’s credit stability:

• Five-year credit default swap (CDS) contracts for Israeli debt surged 14%, now priced at 110 basis points — a clear sign of rising risk premiums.

• Bond traders are paying more to insure against an Israeli default, hinting at broader doubts about the country’s fiscal resilience.

Although some argue that defeating Iran’s nuclear ambitions would ultimately benefit markets, Wall Street investors did not reflect this optimism on Friday.

Short-Term Outlook: High Risk, Limited Reward

Given that both Wall Street and TASE are at or near peak levels, and in light of soaring yields on short-term bonds (e.g., 6-year MCA at 4.3%), financial analysts caution against speculative investing. Many recommend shifting portfolios to lower-risk assets until greater clarity emerges.

War Costs Not Accounted For

The Ministry of Finance did not allocate special funds in its defense budget for a potential war with Iran. According to critics, Finance Minister Smotrich’s sectoral budgeting approach neglected the need for national emergency reserves.

Now, with war expenses piling up — including direct combat costs and damages to infrastructure — the ministry must seek new budgetary sources, potentially raising the tax burden on the public and reopening the state budget mid-year.

Credit Rating at Risk Amid Mounting Debt

The prospect of:

• rising war-related expenditures,

• expanded reserve call-ups,

• and increased national borrowing

has prompted concern that credit rating agencies may downgrade Israel’s sovereign rating once again. A downgrade would raise borrowing costs and further strain Israel’s economic outlook.

In summary, while markets remain open and economic activity continues, Israel’s financial future faces increasing pressure as the war with Iran intensifies — with long-term fiscal implications still unfolding.