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Israel halts strikes in Gaza after Trump's call to stop the fighting

Geopolitics & WarElections & Domestic Politics
Israel halts strikes in Gaza after Trump's call to stop the fighting

The Israeli military has transitioned to defensive operations in Gaza, prompted by President Trump's call for a halt to strikes to secure hostage releases and pursue a lasting peace, marking the closest de-escalation since October 7. Hamas has responded positively to Trump's peace plan, and Israeli Prime Minister Netanyahu, despite initial surprise, has committed to cooperating on its immediate implementation for hostage release. Negotiations, involving U.S. envoys Steve Witkoff and Jared Kushner, are scheduled to begin Sunday in Egypt to finalize technical details, including Israeli withdrawal and prisoner exchanges, signaling a critical step towards a potential resolution of the conflict.

Analysis

The Israeli military has shifted to defensive operations in Gaza after President Trump called on Israel to halt its strikes in the enclave, the IDF said in a statement on Saturday morning local time. Why it matters: This is the closest that Israel and Hamas have come to ending the war since the October 7 attacks almost exactly two years ago. Israeli Prime Minister Benjamin Netanyahu ordered a halt to the operation to occupy Gaza City and a suspension of airstrikes to "prepare for the immediate implementation of the first phase of the Trump Plan for the immediate release of all hostages," his office said. Driving the news: Trump said Friday in a Truth Social post that Israel should stop bombing Gaza "so that we can get the Hostages out safely and quickly." Trump stressed he now believes Hamas is "ready for a lasting PEACE." The president's comments marked the first time he's tried to force Netanyahu to halt the fighting since he returned to office. It came shortly after Hamas responded to Trump's Gaza peace plan with a "yes, but." The group said it was willing to release all remaining hostages in return for an end to the war and a full Israeli military withdrawal. But while it accepted parts of the Trump proposal, Hamas requested technical talks on other parts and political negotiations to settle the rest. Behind the scenes: An Israeli official said Netanyahu was surprised by Trump's response. In consultations Netanyahu held on Friday night — after Hamas' response and before Trump's announcement — he stressed that he viewed Hamas' response as a rejection of Trump's plan, the Israeli official said. The Israeli negotiations team handling the hostage issue actually viewed Hamas' response as a positive reaction that opens a pathway to reaching a deal, the official said. The Israeli official noted that Netanyahu emphasized in those consultations the need to coordinate with the U.S. on their response so as to ensure it does not become established that Hamas answered positively to the U.S. plan. But not long after, Trump publicly stated that he believed Hamas was ready for peace. What they're saying: Mediators in Qatar and Egypt welcomed the statements by Hamas and Trump and said they're getting ready to start negotiations over the implementation of the deal. The leaders of France, Germany, the UK and Italy also quickly weighed in and called to implement the plan and end the war. At 3am local time, after several hours of internal consultation and talks with the White House, Netanyahu issued a statement saying he will work will full cooperation with President Trump. "In light of Hamas' response, Israel is preparing for the immediate implementation of the first phase of the Trump Plan for the immediate release of all hostages. We will continue to work in full cooperation with the President and his team to end the war in accordance with the principles set out by Israel, which align with President Trump's vision," Netanyahu's office said. Between the lines: A U.S. official said that while Hamas didn't fully accept the plan and while Netanyahu didn't fully agree with Trump's statement, the White House believes both sides gave it enough space to continue moving forward towards implementing the plan to end fighting. What's next: Israeli officials spoke on Saturday morning with their Egyptian counterparts to discuss negotiations over implementing parts of the deal — chiefly the timetable and scope of Israeli withdrawal from Gaza and the lists of the Palestinian prisoners and detainees who will be released, an Israeli official said. Talks will begin in Egypt on Sunday on the implementation of the plan. White House envoy Steve Witkoff and Trump's son-in-law Jared Kushner are expected to attend. Egyptian and Qatari mediators will facilitate the indirect talks between Israeli and Hamas negotiators. A White House official said: "Steve Witkoff and Jared Kushner are going to Egypt to finalize the technical details of the hostage release and discuss the lasting peace deal." Editor's note: This story has been corrected to note that talks to implement Trump's plan will begin Sunday (not Monday). A significant de-escalation in the Gaza conflict has been initiated, with the Israeli military shifting to defensive operations following direct public pressure from U.S. President Trump. This development, described as the closest the parties have come to ending the war since its inception, was catalyzed by Trump's call for a halt to strikes to facilitate hostage releases, a move he believes is possible as Hamas is 'ready for a lasting PEACE'. While Israeli Prime Minister Netanyahu expressed initial surprise and privately viewed Hamas's response as a rejection, he has since publicly committed to implementing the 'first phase' of the plan in cooperation with the U.S. Hamas's 'yes, but' response accepts key principles while seeking further technical and political negotiations on a full Israeli withdrawal. This has created sufficient maneuvering room for mediators in Qatar and Egypt, along with U.S. envoys Steve Witkoff and Jared Kushner, to commence formal implementation talks in Egypt. The alignment, though fragile and driven by U.S. intervention, represents a tangible step towards a ceasefire and hostage release, a sentiment supported by major European powers.

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Market Sentiment

Overall Sentiment

moderately positive

Sentiment Score

0.65

Key Decisions for Investors

  • Given the 'moderately positive' sentiment and potential for de-escalation, investors should consider that the geopolitical risk premium priced into assets like oil may decrease, potentially benefiting global equities and other risk assets.
  • It may be prudent to re-evaluate exposure to the defense sector, which could face headwinds from a cessation of hostilities, while sectors sensitive to global economic stability may see a positive repricing.
  • Investors should closely monitor the upcoming negotiations in Egypt, as the situation remains fragile; any breakdown in talks could quickly reverse the current optimistic sentiment and lead to renewed market volatility.