Israeli Stocks Suffer Worst Week Since October 2023 As Iran's Allies Vow Retaliation For Recent Attacks

Amid escalating geopolitical tensions in the Middle East, Israeli stocks are experiencing their steepest weekly decline since early October 2023, when Hamas launched a devastating attack on Israel, killing over 1,000 people and abducting 250 civilians to the Gaza Strip.

The Tel Aviv 125 index has dropped over 4% this week through Thursday, while the shekel weakened by more than 3.8% against the dollar, marking its steepest weekly fall since June 2022.

Exchange-traded funds listed in the U.S. that track Israeli equities, such as the iShares MSCI Israel ETF EIS and the VanEck Israel ETF ISRA, declined by 6.4% and 5.4%, respectively, by the close of trading on Thursday.

What Has Happened In The Middle East This Week?

In the past 48 hours, Middle Eastern tensions have significantly escalated following the deaths of three key commanders from Iran-affiliated military proxies engaged in conflict with Israel.

On Wednesday, Israeli forces announced the killing of Fuad Shukr, a military leader of Hezbollah, in a raid in Beirut. On the same day, Iran accused Israel of assassinating Ismail Haniyeh, the political leader of Hamas, in Tehran.

Iran called for an emergency meeting of the United Nations Security Council to address the incident, while Israel neither confirmed nor denied its involvement in Haniyeh’s death.

According to a source contacted by CNN, Haniyeh was killed in Tehran on Wednesday by an explosive device planted in a guest house he frequently visited. The device was placed two months ago and detonated remotely when he entered his room.

On Thursday, Israel announced that it had eliminated Mohammed Deif, the head of Hamas’s military wing, in an air raid on Khan Younis in Gaza on July 13. Israeli Defense Minister Yoav Gallant stated that this action represents a “significant milestone in the process of dismantling Hamas as a military and governing authority in Gaza.”

“In a world where you can be anything, Mohammed Deif chose to be a mastermind of terrorism,” Israeli Defense Forces stated in an official post on social-media platform X.

Israeli forces also claimed Thursday to have killed Al Jazeera journalist Ismail al-Ghoul. The IDF stated that he was a Hamas military operative and Nukhba terrorist.

Israel On ‘Very High Alert’ As Iran Allies Pledge Retaliation

Hezbollah’s political leader, Hassan Nasrallah, and Iranian officials have vowed to retaliate against Israel. In a speech on Thursday, Nasrallah stated, “We are not saying we are reserving the right to respond — we will respond, this is definite.”

Iran’s Supreme Leader Ayatollah Ali Khamenei remarked on Wednesday, “You killed our dear guest in our house and now have paved the way for your harsh punishment.”

Iran’s acting foreign minister, Ali Bagheri Kani, warned regional counterparts on Thursday that Iran would exercise its “legitimate right to take remorseful and decisive action against” Israel.

Israeli Prime Minister Benjamin Netanyahu emphasized that “Israel is on very high alert for all scenarios, both in defense and offense,” according to an update from his office. He added that Israeli forces will “exact a very high price for any act of aggression against us from any arena.”

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