Shares of Companies with Business Exposure to Israel Fall Amid Escalation in Conflict

Shares of U.S. and European-listed companies with business exposure to Israel experienced a decline on Monday as concerns grew over the escalating conflict between Israel and Palestinian Islamist group Hamas. The recent fighting has caused turbulence in global markets, with Wall Street opening lower and European stocks dipping. The surge in oil prices has also sparked inflation worries, leading investors to seek refuge in government bonds and the dollar.

Several companies saw their shares affected by the conflict. Israeli chipmaker Tower Semiconductor witnessed a 5.2% drop, while Intel and Nvidia dipped 1.1% and 2.1% respectively, dragging down the chip sector. Energy and defense stocks, however, rose amid the turmoil. On the other hand, airline shares plummeted due to fears of higher fuel costs, and some carriers suspended flights to or from Tel Aviv. U.S. cruise operators Norwegian Cruise Line Holdings, Carnival, and Royal Caribbean Group also experienced declines ranging from 3.5% to 5.3% due to fuel-related concerns.

While some analysts believe that the markets will eventually move on if the conflict remains contained between Israel and the Palestinians, the long-term peace prospects have diminished. The violence has likely dampened hopes of a normalization of relations between Israel and regional power Saudi Arabia, according to Raffi Boyadjian, lead investment analyst at XM.

Shares of Israeli companies in various sectors were also impacted. Teva Pharmaceutical, the world’s largest generic drugmaker, saw a 3.3% decrease, while fertilizer group ICL Group experienced a 1.4% dip. Cybersecurity firm Check Point Security slipped 2.0%, and other cybersecurity companies with significant exposure, such as SentinelOne and CyberArk, witnessed declines of 4.3% and 5.4% respectively.

In Europe, Energean, a UK and Israel-listed oil producer focused on the Eastern Mediterranean, fell as much as 19.5% on the STOXX Europe 600 benchmark index. However, the company clarified that its operations in the northern area of Israel, where it is based, were not under attack, and production, supply, and offshore work were continuing.

London-listed BATM Advanced, an Israel-based technology firm, experienced a 7.5% decrease, despite stating that it did not anticipate a significant impact on its trading due to the conflict.

Exchange-traded funds (ETFs) exposed to Israel, such as the iShares MSCI Israel ETF and the ARK Israel Innovative Technology ETF, also faced declines of 6.6% and 4.4% respectively.

The impact of the conflict extended beyond the financial markets, with shares of Adani Ports And Economic Zone in India falling by as much as 5.2%. Adani Ports confirmed that the Haifa Port, which it owns in Northern Israel, remained operational.

As the situation continues to unfold, investors and market participants will closely monitor developments in the region and assess the potential long-term implications for businesses with exposure to Israel.