By Mark Jones
LONDON (Reuters) – Hopes of a ceasefire deal to end the war in Gaza lifted the region’s government bond markets and Israel’s shekel on Tuesday as investors felt relief after 15 months of conflict.
Negotiators were meeting in Qatar in hopes of finalizing a ceasefire and hostage release deal after US President Joe Biden signaled that a deal was within reach.
More than six hours after the talks began there was still no word on an outcome but bonds in Israel and those in Lebanon, Egypt and Jordan were all higher on optimism.
Israel’s shekel and Egypt’s pound were also partly higher in currency markets.
The completion of the ceasefire deal will mark a historic few months in the Middle East.
These include the assassination by Israel of Hamas leader Yahya Sinwar, the weakening of Iran-backed Hezbollah enough to allow Lebanon to elect a new president and, perhaps most surprisingly, the demotion of Syria’s veteran leader Bashar al-Assad. is included
Marten Bresel, a portfolio manager and rates trader at FIM Partners, said a combination of events is helping to boost sentiment towards the sector after a difficult few years.
“The ceasefire agreement is part of that and expectations are high at the moment that the new Syrian government will open up the country more to the West,” he said.
Lebanon has been the biggest tradeoff for investors, though.
Its bonds have nearly tripled in the past few months amid hopes that it can begin to address its dire financial problems now that nearly two years of near-total political paralysis are coming to an end.
Israeli markets bear the scars of the past 15 months of conflict in Gaza. The heavy cost of the war has led to several downgrades of the country’s sovereign credit rating despite never having been cut before last year.
(Reporting by Mark Jones; Editing by Gareth Jones)
