The trend in yesterday’s session on the Tel Aviv Stock Exchange and in the foreign exchange market was negative, and it worsened as the day went on. This was in contrast to the global trend of a weaker US dollar, and the mixed trend on European stock exchanges and in Wall Street futures.
There are several reasons for this trend in Tel Aviv, such as uncertainty over the course of the war, but the main catalyst that sent stocks lower and the shekel weaker was reports that Prime Minister Benjamin Netanyahu may be about to fire Defense Minister Yoav Galant and replace him with Gideon Sa’ar, head of the New Hope party, who is currently outside the coalition. By early afternoon, the shekel had weakened by about 0.5% against the US dollar, but then the decline reached 1%. On the stock exchange, the Tel Aviv 35 index fell by more than 1% as soon as the reports came out, after having been rising for most of the morning. The trend continued this morning, with the Tel Aviv 35 index currently down 0.65%, and the shekel weakening slightly against the US dollar and the euro.
Jonathan Katz, chief economist at Leader Capital Markets, said that the dismissal of the defense minister “reinforces the assumption that we will not reach a ceasefire agreement[in Gaza]and may start an additional campaign in the north, which could lead to further downgrades in the credit rating, which would send the stock market lower.” In his view, the possibility of a higher risk premium in Israel creates negative sentiment among investors. As long as uncertainty is rising, and the replacement of the defense minister will contribute to that, the local stock market will weaken, as will the shekel.
“Investors view Galant’s dismissal as political chaos, increasing the chances of a war in Lebanon, but nothing is happening in the market other than speculators betting on confusion,” says Yossi Frank, head of energy finance and financial risk management at the bank. “Nobody is buying dollars except them. Financial institutions are selling, exporters are selling, the dollar is weakening in global markets, and the CPI reading was supposed to strengthen the shekel significantly. But when the market is in confusion, anyone can do whatever they want.”
This article was published in Globes, Israeli Business News – en.globes.co.il – on September 17, 2024.
© Copyright Globes Publisher Itonut (1983) Ltd., 2024.
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