Following a day in which Gaza-based Hamas militants killed hundreds of Israelis and kidnapped an undetermined number more, 

Israeli stock and bond prices fell, and many companies were shut down. Government bond prices plummeted as much as 3% in the market's immediate reaction to the worst assault on Israel in decades. Important Tel Aviv share indexes (.TA125), (.TA35) closed almost 7% down,
 
Driven by a 9% decline in banking shares (.TELBANK5) on turnover of 2.2 billion shekels ($573 million). The shekel is currently at its lowest point of the year despite the fact that the foreign currency market is closed on Sundays owing to a hotly debated government plan to reform the judiciary.

Jonathan Katz, chief economist at Leader Capital Markets, stated that this round of violence "is expected to be more prolonged and severe than previous ones, clearly having a more negative impact on the economy and the fiscal budget."

"The shekel will most likely weaken sharply tomorrow and we see a high probability that at some point the Bank of Israel will sell FX."

At least 400 Israelis were killed on Saturday by gunmen from the Palestinian organization Hamas who then kidnapped dozens of captives and fled to Gaza.

In retaliation, Israel launched airstrikes against Hamas sites in Gaza.

Thousands of rockets from Gaza were also fired into Israel by terrorists, some of which were able to hit Tel Aviv. This forced airlines to halt flights to and from Israel.

Bezalel Smotrich, the minister of finance, claimed to have given orders to department heads to provide the necessary finances for the war effort as soon as possible.

The Bank of Israel said that a 50-day battle with Hamas terrorists in Gaza in 2014 that resulted in losses of 3.5 billion shekels, or 0.3% of GDP, was too recent to quantify the economic impact from the fight. In 2023 and 2024, the central bank has predicted 3% growth.

AIR TRAVEL DISRUPTIONS

Airline Delta  announced that until Monday all flights to and from Israel to New York and Atlanta had been canceled, while United Airlines UAL stated that "future operations at TLV (airport) will be suspended until conditions allow them to resume." Flights to and from Tel Aviv have been halted, according to Air India, until October 14.

The smaller competitor to United Airlines, Arkia, claimed to be running rescue flights out of Athens to bring back Israelis who had gone on holiday. The foreign crew on some of its leased aircraft had requested to leave Israel, according to another competitor,

Israir I ISRG, which claimed it was flying rescue flights from Larnaca in Cyprus but cautioned it could operate a limited schedule in the coming days.

Nvidia, the leading producer of processors for computer graphics and artificial intelligence, 

Announced it had canceled an AI summit that was set to take place in Tel Aviv the next week and at which CEO Jensen Huang was slated to attend. Aside from pharmacies and supermarkets, most businesses gave their employees the day off, schools were closed, and most shops were shuttered.

According to Israel's Manufacturers' Association, industries were still in operation to allay worries about a possible shortage of food and other necessities.

"All companies will continue to operate as much as possible despite the difficult emergency conditions, 

The rocket barrages and the resulting shortage of workers," Ron Tomer, organization president, stated. "Thanks to Israel's production independence ... even in times of emergency, the residents of Israel will lack nothing."

The biggest employment and exporter in Israel, Intel Corp., declined to comment on whether chip manufacturing was impacted. "We are closely monitoring the situation in Israel and taking steps to safeguard and support our workers," stated a spokesperson. According to Tower Semiconductor, business is ongoing as usual. (3.8388 shekels = $1)

Disclaimer: We don,t provide any Investment advice.