The Tel Aviv Stock Exchange demonstrated notable resilience in the trading week concluding Friday, March 7, 2026, with its primary indices posting solid gains against a backdrop of heightened geopolitical tension and commodity market volatility. Israel's benchmark TA-35 index closed the week at 4,356.68, marking a weekly advance of approximately 5.5% from its level on February 27. The broader TA-125 index exhibited even stronger performance, finishing at 4,329.54 for a gain of roughly 6.3% over the same period.
Divergence from Global Markets
This upward movement in Tel Aviv stands in stark contrast to the risk-off sentiment that gripped major global equity markets. As oil prices surged following military engagements between Israel, the United States, and Iran that began on February 28, investors worldwide reassessed inflation and growth prospects, leading to weekly declines in U.S. and European stock indexes. The Israeli market's performance highlights a decoupling, as local investors focused on sectors perceived to benefit directly from the prevailing security and energy dynamics.
Sector Performance: Energy and Defense Lead
The most pronounced gains were concentrated in the energy and defense sectors. The TA-Oil & Gas index soared about 15% week-over-week to close at 3,582.17. Similarly, the TA Defense index surged roughly 12%, ending the week at 5,477.12. In comparison, the TA-Banks5 index registered a more modest increase of just over 1%. This sectoral tilt underscores the market's focus on firms positioned for the current geopolitical and commodity price environment.
A symbolic shift occurred as defense contractor Elbit Systems ascended to become the most valuable Israeli company by market capitalization on the exchange, surpassing pharmaceutical giant Teva and the nation's largest banks. According to reports, Elbit's market value reached approximately 123 billion shekels (equivalent to $40 billion) following a year-to-date share price gain of nearly 45%.
Commodity Shock and Macro Implications
The energy complex remains the central swing factor for global markets. Since the late-February attacks, oil prices have climbed nearly 20%, while European natural gas prices have jumped almost 60%. Analysts warn this shock could significantly bleed into inflation expectations and interest rate pricing. Investment bank Goldman Sachs cautioned that crude oil prices could exceed $100 per barrel in the coming week if there is no resolution to the disruption of flows through the Strait of Hormuz, adding that refined product prices might surpass peaks seen in 2008 and 2022 if constraints persist through March.
Physical market logistics are strained. While Saudi Aramco has attempted to reroute more crude via the Red Sea, traders and ship brokers note that capacity and security risks limit diversion options. "Shippers are struggling to find tankers in proximity to Yanbu," noted Janiv Shah of Rystad Energy. The prolonged disruption presents a clear macroeconomic risk, potentially flipping the growth backdrop rapidly. Global bond markets sold off during the week as investors priced in higher inflation risks emanating from the Middle East conflict, a shift that can tighten financial conditions independently of central bank action.
Currency and Daily Trading Activity
In currency markets, the Israeli shekel held broadly firm against the U.S. dollar despite the volatility. The Bank of Israel's representative rate set the dollar at 3.0770 shekels as of March 6, reflecting only a minor daily appreciation for the dollar. Friday's session on the TASE was comparatively quiet, with the TA-35 inching up a mere 0.02% as gains in oil and gas, real estate, and banking sectors offset pockets of selling. Earlier in the week, technology and travel-related names also experienced sharp moves, with NICE jumping 5.8% and Delek Group gaining 5.7% on Thursday, while Teva declined about 2%.
Market Resilience and Risks
Some market observers interpret Tel Aviv's resilience as evidence of a market that has learned to trade through periods of conflict—until it cannot. "If the perceived risk decreases, that's obviously good news," economist Yossi Spiegel told Le Monde, while simultaneously warning that a wider regional escalation would severely test that ingrained confidence. The performance suggests investors are currently betting on the profitability of specific sectors outweighing the broader macroeconomic risks associated with the conflict, though this calculus remains fragile and subject to change with any significant escalation.
