Israeli Markets Plunge After Election Amidst Government Formation Uncertainty
Translated & summarized from Maariv by baba
Israeli stock markets experienced a sharp decline on the first trading day after the elections, with real estate and construction shares dropping over 13% and the Shekel weakening by 2.3% against the dollar and euro. Technology stocks, however, saw gains. Analysts attribute the market's reaction to uncertainty surrounding the new government's formation, suggesting the impact is likely short-term.
The story in 5 lines · by baba
- Israeli real estate and construction stocks plunged over 13% after the elections.
- The Israeli Shekel weakened by 2.3% against the US Dollar and Euro.
- Technology and semiconductor stocks showed gains amidst broader market declines.
- The market downturn is linked to uncertainty over the new government's formation.
- Analysts predict the political uncertainty's market impact will be short-lived.
The first trading day following the recent elections in Israel saw a significant downturn in the stock market, particularly affecting real estate and construction shares, which plummeted by over 13% in some prominent cases. Concurrently, the Israeli Shekel weakened considerably, with the US Dollar and Euro each rising approximately 2.3% against it. This market volatility occurred against a backdrop of uncertainty surrounding the formation of the new government.
The Tel Aviv Stock Exchange experienced broad declines, with the TA-35 index falling 1.81%, the TA-90 dropping 4.47%, and the TA-125 losing 2.46%. The real estate and construction sectors were hit hardest, with the TA Construction index down 8.77% and the TA Real Estate index down 6.3%. Insurance stocks also suffered, with their sector index declining by 5.24%. Among the largest companies, Africa Israel Residences saw a 13.63% drop, followed by Israel Canada with a 13.01% decrease.
In contrast, technology and semiconductor stocks showed resilience and even gains. Tower Semiconductor rose 6.14%, Nova added 5.54%, and Ormat Technologies increased by 4.8%. The TA Technology index closed up 0.78%, and the TA Bio-Med index gained 1.09%.
Analysts from the Stock Exchange's research unit noted that the sharp rise in the dollar and euro occurred while the global dollar index remained relatively stable, indicating that local factors were primarily responsible for the Shekel's weakening. They also pointed out that historical precedent suggests political uncertainty's impact on local stocks is typically short-lived. The expectation is that as the political landscape clarifies, market performance will once again be driven by economic activity, corporate earnings, and global trends.
Meanwhile, on Wall Street, trading was mixed as markets awaited the Federal Reserve's interest rate decision and earnings reports from major tech companies like Microsoft and Alphabet. The yield on US 10-year government bonds rose above 5% during the day.
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