Israel’s Tel Aviv Stock Exchange closed at fresh record highs in a surge described as the strongest session since the COVID era. The TA-35 jumped 4.6% and the broader TA-125 climbed 4.8%, with TA-90 also outperforming on the day.

The shekel strengthened about 1.5% against the dollar, pushing back toward levels near a 30-year high. At the same time, options-based gauges of expected shekel volatility spiked, markets are buying the upside, but bracing for shocks.

Traders credited a sharp repricing of the war outlook, confidence in Israel’s operational momentum, plus expectations that the campaign is shorter and strategically decisive, would reduce Israel’s risk premium and ultimately ease financing pressure. Banks, energy, and defense-linked shares led the green wave across the board.

The Finance Ministry sold about 3.3 billion shekels of debt in its weekly auction, with demand reported around 20 billion shekels and participation by major international banks—an unusually clear vote of confidence under fire. The main variable now is duration: if the fighting drags or expands, analysts warn markets may be underpricing the fiscal and macro risk.