Global markets shuddered and Israeli financial systems quaked Thursday morning as U.S. President Donald Trump dropped a geopolitical bombshell: negotiations with Iran over its nuclear program have all but collapsed. The announcement, coupled with explosive rumors of an imminent Israeli military strike on Iran’s nuclear infrastructure, sent investors fleeing and currencies tumbling.

Panic on the Trading Floor: Israeli Indices Plunge

The Tel Aviv Stock Exchange opened to a wave of red. By mid-morning:

• The TA-35 Index nosedived 2.19%, crashing to 2,676.79 points.

• The broader TA-125 Index plunged 2.49% to 2,685.76.

With the exception of the defense sector, nearly every industry saw immediate losses. Banks led the retreat amid fears of economic instability and retaliatory actions, while Elbit Systems Ltd. (Nasdaq: ESLT; TASE: ESLT) — Israel’s premier defense electronics manufacturer — defied the drop, climbing 1.25% on speculation that war means massive defense contracts.

החשש מתקיפה ישראלית באיראן מחליש את השקל ומעלה את מחיר הנפט https://t.co/jI7wtBmMtL pic.twitter.com/qwv5hDz09L

— Globes גלובס (@globesnews) June 12, 2025

Currency Shock: Shekel Spirals

The Israeli shekel weakened dramatically, spooked by escalating tensions and a growing sense of economic uncertainty:

• USD/NIS surged 1%, hitting 3.562/$.

• EUR/NIS jumped 1.28%, reaching 4.105/€.

An updated trading report from the Bank of Israel confirmed continued pressure on the shekel, noting an intra-day high of 3.5792/$, a sign that fear of armed conflict is deeply shaking investor confidence.

🚨⚡️ BREAKING:

Home Front Command expected to update guidelines starting 6 PM — stay alert for official announcements, warns RakhaDashot.

Tel Aviv’s stock market tumbles sharply on the news: TA-125 index down 3%, widespread declines across Israeli stocks.

The escalating… pic.twitter.com/ELgZ0kt3er

— RussiaNews 🇷🇺 (@mog_russEN) June 12, 2025

Strategist: 'The Markets Are Pricing in War'

Modi Shafrir, chief market strategist at Bank Hapoalim, minced no words in an interview with Globes:

“The financial world is reacting not just to rhetoric — it’s responding to smoke on the horizon. Yesterday evening, the U.S. began evacuating diplomatic staff. This morning, President Trump declared America is ‘ready to strike.’ Simultaneously, reports are circulating that the IDF is on high alert and preparing for a potential preemptive attack on Iran’s nuclear infrastructure.”

Shafrir emphasized that these developments diverge starkly from the earlier tone of diplomatic optimism:

“Not long ago, we were hearing talk of nearing an agreement. Now, everything has shifted. The language from Washington is hawkish. The mood in Jerusalem is hawkish. And the market — well, it’s pricing in war.”

הקשר בין טהרן לת״א… pic.twitter.com/YOHaO0lPPW

— הבורסה לניירות ערך Tel Aviv Stock Exchange (@TASE_IL) June 12, 2025

Oil, Gold Soar Amid Regional Volatility

As talk of a major military confrontation spread:

• Crude oil prices surged globally, pricing in the disruption of shipping lanes and oil fields in the Persian Gulf.

• Gold jumped, with investors flocking to the traditional safe-haven asset amid fears of regional conflagration.

The Shekel’s Future Hinges on Israeli Action

Shafrir laid out two potential financial trajectories, both hinging on Israel’s next move:

• If Israel launches a strike, the shekel will likely weaken sharply in the short term, as markets anticipate Iranian retaliation.

• However, if the operation succeeds in neutralizing Iran’s nuclear program, long-term investor confidence in Israel may rebound, possibly strengthening the currency.

“A decisive strike that removes the existential threat could actually stabilize the region over time,” he said. “But a failed or messy operation — especially if it draws Israeli cities into direct retaliation — would spell trouble for the economy, the shekel, and global confidence in Israeli security.”

Conclusion: An Economic Frontline

Today’s currency markets are not just responding to numbers—they’re reacting to battle plans. With embassies evacuated, leaders speaking in warlike terms, and financial indicators screaming volatility, Israel’s economy now stands at the edge of a strategic precipice.

Whether that edge leads to deterrence or devastation may be decided not by markets — but by missiles.