The trend in yesterday’s session on the Tel Aviv Stock Exchange and on the foreign exchange market was negative, and worsened as the day wore on. This was contrary to the global trend of a weakening US dollar, and the mixed trend on European exchanges and in futures on Wall Street.
There are several reasons for the trend in Tel Aviv, such as uncertainty about the course of the war, but the main trigger that sent stocks downwards and weakened the shekel was the reports of the possibility that Prime Minister Benjamin Netanyahu was about to dismiss Minister of Defense Yoav Gallant and replace him with Gideon Sa’ar, head of the New Hope party, which is currently outside the coalition. Until the 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 emerged, after being on a rise for most of the morning. The trend has 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..
Leader Capital Markets chief economist Jonathan Katz says that the removal of the defense minister "strengthens the assessment that we will not reach a ceasefire agreement (in the Gaza Strip) and will probably begin an additional campaign in the north, which will be liable to bring in train a further credit rating downgrade, leading to falls on the stock market." In his view, the prospect of a further rise in Israel’s risk premium is creating negative sentiment among investors. As long as the uncertainty increases, and replacing the minister of defense will contribute to that, the local stock market will weaken, as will the shekel."
Yossi Frank, head of Energy Finance - Financial Risk Management says, "Removing Gallant is perceived by investors as political chaos, and as raising the chances of a war in Lebanon, but there’s nothing happening on the market other than activity of speculators betting on confusion. No-one is buying dollars apart from them. The financial institutions are selling, exporters are selling, the dollar is weakening on world markets, the CPI reading should have led to a substantial strengthening of the shekel. But when the market is in a state of confusion, everyone can do what he wants."
Published by Globes, Israel business news - en.globes.co.il - on September 17, 2024.
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