Israel's financial markets defied regional turmoil this week, with stocks and the shekel surging even as war with Iran entered its second week. The Tel Aviv 35 index climbed over 7% in dollar terms, making it the second-best performing major stock gauge globally. Energy company Delek Group jumped 22%, while defense firm Elbit Systems rose 16%, driven by local investors including mutual funds focused on Israeli assets.

Energy prices soared worldwide amid fears of prolonged conflict, yet Israel's markets showed remarkable resilience. The shekel strengthened 1.4% against the dollar, marking its strongest advance in two months and the most among major currencies. Some investors appear to be betting on long-term stability, looking past current volatility toward potential strategic gains for Israel and the US.

Bank Hapoalim CEO Yadin Antebi told Bloomberg that the conflict could ultimately strengthen Israel's geopolitical position by weakening or removing its biggest threat. This optimistic view from a major financial institution suggests that despite ongoing war, some investors see opportunity in Israel's market, betting that eventual victory could bring reduced regional risks.