Tel Aviv Stocks Reverse Gains as Iran Deal News Fades

Trading on the Tel Aviv Stock Exchange opened Monday with gains after reports of a developing agreement between the United States and Iran, expected to be signed on Friday, but the initial optimism quickly disappeared. By early afternoon, the main indices had erased their gains and turned sharply lower.

As of 2:37 p.m., the TA-35 was down about 1%, the TA-90 had fallen 1.9%, and the TA-125 was off 1.2%. The weakest shares were in the defense sector, including Elbit Systems and Aerodrom Group, which dropped sharply from the opening bell as the market priced in lower expected demand for military equipment if a deal is reached.

Insurance stocks also posted steep declines, with Harel, Migdal, Menora and Clal all falling hard. The report noted that insurers manage pension savings and large investment portfolios, which makes them especially sensitive to broad market declines. Bank shares also weakened.

In foreign exchange, the dollar fell overnight on the first reports of the agreement, briefly dropping to 2.88 shekels when regular trading began, before recovering slightly. By the latest update, it was trading near 2.91 shekels.