US-Iran Tensions Trigger Sharp Market Reactions and Shekel Weakness

Financial markets sharply reacted to escalating tensions between the United States and Iran, with significant impacts on currency, oil prices, and stock indices. On July 8, 2026, the US dollar surged to 3.05 shekels amid rising geopolitical risks. Concurrently, crude oil prices jumped 5 percent to $77 per barrel following heightened rhetoric, including tweets from former President Donald Trump.

Global stock markets, including Tel Aviv's, experienced declines. The leading Israeli indices fell by approximately 1%, with the TA-35 dropping 0.9%, TA-90 down 1.8%, and TA-125 decreasing by 1.2%. The shekel weakened against the dollar, trading above the 3.05 threshold.

Yossi Mansha, founder and co-CEO of Altshuler Shaham Financial Services, explained that the escalation in the Persian Gulf and events near the Strait of Hormuz increased the global risk premium. This drove oil prices higher and boosted demand for the dollar as a safe haven currency. Mansha noted that as long as energy prices remain elevated and markets price in geopolitical uncertainty, the shekel will be influenced not only by Bank of Israel's domestic policies but also by global dollar trends, US bond yields, and Middle Eastern developments.

He further highlighted that while the market is still digesting the Bank of Israel's recent interest rate cut, a more significant factor for the currency market was the announcement that the central bank resumed intervention by purchasing dollars during June.