Tel Aviv Stocks Hit Record Highs as Markets Look Past Iran-Israel Tensions

Global markets are showing surprising resilience amid rising tensions between Israel and Iran. Oil prices briefly fell, stock futures climbed, and even gold—typically a safe-haven asset—lost ground. This muted reaction suggests investors are betting the conflict will not escalate further.

Ed Yardeni of Yardeni Research believes the worst may be over. “The next move is up to the Iranians. Our bet is that they will sue for peace,” he wrote in a note to clients. If Iran avoids further retaliation, Yardeni expects oil prices to retreat and global stock markets to advance. He sees any pullback in gold as a buying opportunity, given central banks’ continued interest in the metal.

The optimism is most evident in Israel’s own stock market. The Israel MSCI Index has reached record highs, reflecting investor confidence that the regional outlook may be improving. “Predicting Middle East geopolitics is risky,” Yardeni said, “but Israel’s market suggests a potential turning point, especially now that Iran has been de-nuked.”

Yardeni is hopeful that the Trump administration could expand the 2020 Abraham Accords to include Saudi Arabia and other Arab nations, reducing regional volatility. In an ideal outcome, he envisions a new Iranian government focused on economic development rather than conflict.

Still, he warns of a darker path: Iran’s current regime could survive—or be replaced by a military dictatorship—leading to prolonged instability, attacks on Israel, threats to U.S. interests, and efforts to block the Strait of Hormuz. Such a scenario could trigger a surge in oil prices and raise the risk of global recession.

But for now, Yardeni remains bullish. He believes the S&P 500’s rally, which began in October 2022, is intact. His year-end target for the index is 6,500, with a long-term goal of 10,000 by 2030, supported by what he calls a “Roaring 2020s” scenario.

Adding to the optimism, corporate earnings forecasts are on the rise. Forward earnings for the S&P 500 have hit record highs for the third week in a row. Concerns about tariffs are fading, with analysts expecting little to no impact on profit margins.

“The bottom line,” Yardeni said, “is that the bull market is alive and well.”