On Sunday, Israeli stocks experienced a remarkable surge, reaching record highs in response to recent U.S. strikes targeting Iran’s nuclear facilities. Investors are optimistic that these military actions will significantly hinder Tehran’s ability to develop nuclear weapons, prompting a bullish sentiment on the Tel Aviv stock exchange.

The broad Tel Aviv 125 index, a key benchmark for the Israeli stock market, closed up by 1.8% on Sunday, bringing its weekly gains to an impressive nearly 8%. Additionally, the blue-chip TA-35 index saw a rise of 1.5%. This upward trajectory follows a week of consistent gains for the stock market, which rose approximately 6% over five consecutive trading sessions, driven by Israel's military strikes on Iranian nuclear and military sites just before the unexpected U.S. attacks on Saturday.

As tensions escalate in the region, stock markets across the Middle East have also experienced strong rallies. For instance, in Kuwait, the Boursa Kuwait Premier Market Index increased nearly 1% to reach 8,650.6, while in Muscat, Oman, the MSX30 Index rose by 0.50% to stand at 4,525.31.

This rally can be attributed to a significant announcement made by U.S. President Donald Trump, who stated that key Iranian nuclear facilities were destroyed in overnight strikes that employed powerful bunker-busting bombs. This military action aligns closely with Israel's offensive approach, marking a major escalation in the ongoing tensions throughout the Middle East.

Ronen Menachem, chief markets economist at Mizrahi Tefahot, commented on the situation, noting, "The destruction of Iran's key nuclear facilities by the U.S. military is, of course, a positive development in terms of improving the regional security environment and reducing Iran’s military and nuclear capabilities," as reported by Reuters.

The backdrop to these events includes Israel's intense strikes on Iranian nuclear sites, ballistic missile production centers, and key military figures on June 13, which prompted retaliatory actions from Iran. On Sunday, Tehran launched a barrage of missiles at Israel, resulting in injuries to dozens and significant damage to buildings in Tel Aviv.

Menachem further suggested that, when considering the medium- to long-term implications, there may be genuine opportunities for strategic investors, particularly in light of the potential for closer ties between Saudi Arabia and the United States. This evolving geopolitical landscape could reshape the dynamics of the region and influence investment strategies significantly.