Israeli shares sank dramatically on Sunday, mirroring global market volatility and reflecting the ongoing danger of a response from Iran and Hezbollah following the Israeli assassinations of Hamas chief Ismail Haniyeh and Hezbollah commander Fouad Shokor.

The benchmark TA-35 stock index fell as much as 2.7%, which comprises the most in one week, before slightly paring losses to be down around 2.5% at just before 1 pm. local time, Bloomberg reported. The Tel Aviv Stock Exchange is closed on Friday and Saturday.

On July 31, the IRGC announced the martyrdom of Haniyeh, who was on a visit to Tehran to attend the inauguration ceremony of Iran's new President Masoud Pezeshkian.

Adi Babani, head of international sales and trading at Tel Aviv-based Meitav Investments Ltd., reported that tensions from an Iranian reaction are "still in place, on top of the global market sellof."

US markets fell on Friday after dismal job statistics fueled fears of an economic slowdown and raised concerns that the Federal Reserve isn't moving fast enough to decrease interest rates.

A chief markets economist at Mizrahi Tefahot Bank Ltd. linked the decline to both the sharp drops in the US on Friday and "tremendous security tensions" in "Israel". 

“The market is expected to continue to be very nervous,” he said.

According to Menachem, investors have two possible outcomes, either the escalation continues to harm Israeli economic activity while expanding to global markets, or allies will pressure "Israel" and finally a solution will be found that will result in a ceasefire in Gaza.

In the latter event, Israeli shares may resume a pattern of price gains and potentially outperform international markets, he added. The TA-35 index reached a new high less than a month ago.

Regional tensions also impacted other Middle Eastern stock markets, including those in Egypt and Saudi Arabia, as they began their new trading week.

US, 'Israel' to regret Haniyeh murder after Iran retaliation: Ghalibaf

"Israel" and the United States will regret the assassination of Ismail Haniyeh, the head of Hamas' political bureau, after Iran's "crushing and clever response," Parliament Speaker Mohammad Baqer Qalibaf said on Sunday. 

“The sweet taste of a celebration of religious popular sovereignty...[in] the Islamic Republic turned bitter by the martyrdom of operational and political commanders of the Resistance, particularly Ismail Haniyeh, who was our guest,” the politician said during an open parliamentary session, referring to the late Hamas leader's presence in Tehran for President Masoud Pezeshkian's inauguration. 

“Undoubtedly, the Islamic Republic's crushing and clever response will leave a sweet taste in the mouth of the people and Resistance forces, as well as the world’s freedom seekers, and will make this regime, especially its backer – i.e. the US – regret their act," he stated.

The Head of the National Security and Foreign Policy Committee of the Iranian Parliament, Ebrahim Azizi, shared a statement similar to the speaker's, emphasizing to the IRNA news agency that Iran's retaliation "to this act of the Zionist regime will be regret-inducing, painful and agonizing, … [something] that it will not forget forever."

The lawmaker added that the martyrdom of Haniyeh would strengthen the Islamic Resistance's front and make it more steadfast.

“Our powerful military forces … will give this terrorist enemy and its deceitful supporter, the United States, a historic lesson,” Ghalibaf emphasized, noting that the Resistance's retaliation will “force them ("Israel" and the US) to reform their calculations so that they don’t repeat their mistake that is harmful to their own security and regional peace.”

The top lawmaker added that the Iranian legislature calls for a deterrent reaction to preserve the country's national interests.

Qalibaf also called on the international community to unite to defend the rights of Palestinians against the alliance between Western governments and the Israeli occupation.

Kazem Gharibabadi, the Deputy Chief for International Affairs of the Iranian Judiciary, warned in an interview for Al Mayadeen that the Israeli occupation would face severe repercussions for its actions, such that "it would not dare to commit further acts of terrorism or violate Iran’s sovereignty."