Israeli Markets Tumble as Election Results Fuel Political Uncertainty
Translated & summarized from Kan News by baba
The Tel Aviv Stock Exchange and the Israeli shekel experienced sharp declines on Wednesday following partial election results that suggest prolonged political uncertainty. The TA 35 index fell 1.5%, and the shekel weakened against the dollar and euro. Preliminary results show no clear majority for any bloc, potentially leading to extended coalition talks. Historical data indicates market performance around elections can be inconsistent.
The story in 5 lines · by baba
- Israeli markets fell sharply and the shekel weakened following inconclusive election results.
- The TA 35 index dropped 1.5%, with insurance and real estate sectors seeing the biggest losses.
- The shekel weakened against the dollar and euro, reversing gains made on election day.
- Preliminary results show no clear majority for any political bloc, indicating potential coalition instability.
- Historical analysis suggests market performance after elections is not consistently tied to decisive outcomes.
The Tel Aviv Stock Exchange opened sharply lower on Wednesday, its first trading day after the Knesset elections, with the Israeli shekel also weakening against the dollar and euro. The market's reaction is attributed to the partial election results and concerns over prolonged political uncertainty. By mid-morning, the TA 90 index had fallen over 3%, the TA 125 by about 2%, and the main TA 35 index by approximately 1.5%, trading at 4,144 points around 10:20 AM. The steepest declines were seen in the insurance and real estate sectors, both down more than 4%, while the banking index dropped 2.5%. These losses followed significant gains recorded on Monday, the day before the election, with no trading on Tuesday due to the vote.
The foreign exchange market also saw a reversal, with the dollar rising back to around 3.09 shekels, a 2.4% increase from its low of approximately 3.02 shekels during election day. The euro traded above 3.43 shekels. This weakening is specific to the shekel, as the global dollar index remained stable and the euro showed little movement against the dollar, indicating a decline in the Israeli currency's value.
As of 10:07 AM, with approximately 66.2% of votes counted, the preliminary results did not indicate a clear majority for any bloc. The bloc led by Netanyahu was projected to win 54 seats, a bloc led by Izankot 48 seats, and Arab parties 18 seats. These figures are partial and subject to change as the count continues. The absence of a decisive majority raises the possibility of lengthy coalition negotiations.
Historically, market performance around elections is not always consistent. Research by the Stock Exchange's research unit, conducted by macro economist Nissan Avraham and examining ten election cycles since 2003, found that the average return of the TA 125 index five months after elections was similar whether the outcome was decisive or inconclusive. However, these are historical averages, and market performance is also influenced by global trends and other economic and security factors.
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