Tel Aviv shares break record highs in 2025 despite war, outpacing global markets

This year’s local rally outperformed gains in major global indexes, boosted by optimism over the removal of the Iranian threat and a ceasefire deal to end the two-year war in Gaza

Bucking the odds, Israel’s main stock indexes this year broke through multiple record highs despite raging multifront wars, outperforming global peers as local and foreign investors doubled down on investment in Tel Aviv-listed companies.

Already in 2024, the TASE was the world’s fastest-rising stock market — after taking a big plunge at the outbreak of war with the Hamas terror group in October 2023.

Israel’s main stock indexes continued to climb this year, and gains accelerated following the conflict with Iran in June and a ceasefire agreement with Hamas in October.

In 2025, the TA-35 index of blue-chip companies soared 53 percent, the benchmark TA-125 index jumped 52%, and the TA-90 index jumped by about 46% as of the end of trading on December 19, according to the Tel Aviv bourse annual report published on Sunday. During the same period, the S&P 500 and NASDAQ-100 indices in the US increased by 18% and 22%, respectively, and the UK’s FTSE 100 index was up 25%.

“2025 was characterized by the continuation of geopolitical challenges, alongside a gradual economic recovery from the repercussions of the longest war Israel has ever known,” said Sarit Berman, head of research at the Tel Aviv Stock Exchange. “Military superiority and capabilities that Israel demonstrated during the war, as well as the ceasefire agreement with Hamas, were significant factors strengthening investor confidence in the local market and added an element of optimism.”

Berman noted that among the key events were Israel’s military achievements against Iran’s nuclear program — alongside the already weakened Iranian proxies in Lebanon, Syria, and Gaza — and the ceasefire agreement in October, which put a halt to the two-year Israel-Hamas war.

For decades, the Iranian threat was a cloud looming over Israel’s economic horizon, cited as a major geopolitical threat by local and global investor reports, international credit rating agencies, and country forecasts.

On the economic front, Berman cited the central bank’s efforts to deal with inflationary pressures, November’s first interest rate reduction in almost two years, and the government’s fiscal policy to reduce the deficit as factors driving investor confidence in the local stock market.

Over the more than two years since the war with Hamas broke out in October 2023, the TA-35 index leaped by about 100%, and the TA-90 index surged by about 93%, Tel Aviv bourse data showed.

The performance of Israel’s main share indices, a barometer for a country’s economic performance, also served as a magnet for attracting foreign investment inflows back to the local stock market, the bourse said.

During 2025, foreign investors purchased local shares worth about NIS 4.3 billion, mainly of companies in the financial and defense sectors, after a sell-off in the previous year. Israeli retail investors bought NIS 13.7 billion worth of shares last year.

Buoyant investor interest fueled gains in financial sector stocks, including the country’s five largest banks and insurance companies, as well as energy stocks. In 2025, the TA-Insurance index returned 179%, the TA-Financial index 106%, the TA Banks index 68%, and the TA Energy Infrastructure index 71%.

Trading volumes on the Tel Aviv stock market also broke records. Average daily trading volume this year jumped 56% to NIS 3.4 billion, compared to 2024.

“The improvement in investor sentiment after a prolonged period of uncertainty, the expectation of an economic recovery that will follow, a decline in geopolitical risk perception, and the sharp increases in local stock indices have contributed to an increase in investor appetite for risk, increasing interest in new companies,” said Berman.