Israeli Stock Market Faces Uncertainty Amidst Elections and Global Economic Pressures
Translated & summarized from Bizportal by baba
The Israeli stock market saw significant drops last week, with the TA-35 index down 3.7%, amid growing concerns about the upcoming elections and global economic pressures. Teched is poised for a strong opening due to FDA drug approval, while upcoming CPI data and interest rate decisions add to market uncertainty. Analysts are divided on the impact of the election results on various sectors, with some predicting significant influence on banking and real estate.
The story in 5 lines · by baba
- Israeli stock market indices, including TA-35 and TA-125, experienced significant declines last week.
- The upcoming Knesset elections on October 27th are creating political uncertainty for the stock market.
- Teched is expected to lead the market opening with a positive arbitrage gap following FDA drug approval.
- The September Consumer Price Index (CPI) will be released this week, impacting the Bank of Israel's interest rate decision.
- Analysts disagree on the extent to which election outcomes will influence sectors like banking and real estate.
The Israeli stock market experienced significant declines last week, with the TA-35 index losing 3.7% and the TA-125 falling 3.7%. While a partial recovery occurred on Friday, with the TA-90 index rising 1.6%, the main index continued to drop. Year-to-date, the TA-35 shows a positive return of 11.9%, and the TA-125 is up 7.2%, but the TA-90 is down 7.6%, indicating a divergence between large-cap and mid-cap stocks. This trend mirrors Wall Street, where a few tech giants drive gains while other stocks lag.
Factors influencing the market include the upcoming Knesset elections on October 27th, creating political uncertainty. While some, like Meitav Chairman Avner Stepak, believe politics has limited impact, others, such as IBI, argue that the next government's composition will significantly affect sectors like banking, real estate, and defense, influencing the shekel's exchange rate, risk premium, interest rates, and budget policy.
Teched is expected to lead the market at the start of the week with a positive arbitrage gap of approximately 4.9%, following the FDA's approval of its new schizophrenia drug, WELTRUZA. Other dual-listed stocks show mixed signals, with some positive gaps like Palo Alto Networks and negative ones for Tower Semiconductor and Nova.
Key economic events this week include the release of the September Consumer Price Index (CPI) on Thursday. Meitav and Leader Capital Markets forecast a 0.3% monthly decrease, which could lead to a slight rise in annual inflation to around 1.8%. The market will closely watch whether this indicates broader price moderation or temporary effects from fuel and travel costs, especially with the Bank of Israel's interest rate decision due on October 21st.
Other significant market events include NextVision's sharp decline after a large sale by Fidelity, Discount Bank receiving approval to merge with Mercantile Bank, and progress in the Gush Dan metro project tenders. Navitas Petroleum faces challenges in its Sea Lion project due to contractor withdrawals amid geopolitical tensions in the Falklands region. Renewable energy stocks continue to face pressure from rising bond yields, despite expansion efforts by companies like Doral.
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