In the immediate aftermath of Israel’s Tuesday general elections, the Tel Aviv Stock Exchange (TASE) saw extreme trading volatility that stretched across Wednesday and into Thursday morning, per reports from leading Israeli economic daily TheMarker and local news outlet Ynet.
On Wednesday, two of TASE’s flagship indices posted steep losses: the TA-35 dropped 1.8% and the TA-125 fell 2.5%, while the lesser-tracked TA-90 plunged a far steeper 4.6%, with banking, insurance and real estate sector indices also logging sharp downturns. A partial market rebound took hold by early Thursday, even as the broader trading landscape remained choppy. The Israeli shekel also broke a months-long streak of robust performance to depreciate against major global currencies, hitting exchange rates of 3.13 shekels to the U.S. dollar and 3.47 shekels to the euro at one point on Wednesday.
Local economic analyst Nissan Avraham explained that the initial sell-off stemmed in part from a market correction of overinflated pre-election optimistic forecasts, as investors had widely anticipated a clear, definitive political outcome. The looming risk of a parliamentary deadlock and extended governing uncertainty exerted heavy downward pressure on trading activity, Avraham noted, referencing the election’s inconclusive preliminary results. Drawing on historical market patterns, he added that TASE has a consistent track record of bouncing back rapidly from sharp short-term dips, though near-term volatility will persist as traders react to every new political development. Over longer time horizons, he emphasized that investors will shift focus to broader economic fundamentals rather than single-day trading swings.
Market risk specialist Yosef Freiman traced the shekel’s whipsaw movement to shifting electoral projections: initial euphoria across the Zionist opposition bloc on Tuesday night drove a sharp strengthening of the shekel and a drop in the dollar’s exchange rate, but updated exit polls showing that Benjamin Netanyahu’s far-right bloc had secured more Knesset seats than initially estimated sparked fresh anxiety and triggered the shekel’s depreciation.
As Israel’s Central Elections Committee moved into its second full day of ballot counting on Thursday, preliminary tallies showed Netanyahu’s bloc holding 53 parliamentary seats, while the Zionist opposition led by former military chief Gadi Eisenkot controlled 48 seats. The two Palestinian-led political factions, the Joint List and Ra’am, held a combined 19 Knesset seats, positioning them as critical kingmakers with the power to unseat Netanyahu’s outgoing ruling coalition, which had lost 15 seats as of Thursday morning. A TheMarker op-ed summed up market frustration by noting that local bourse participants had heavily priced in a governing turnover, only to be caught off guard by results that the wider Israeli economy has reacted negatively to.
Adding to the market turmoil, a recent public uproar erupted after Netanyahu publicly floated the idea of leveraging cryptocurrency to evade international sanctions targeting Israel. The Bank of Israel immediately pushed back against the proposal, stating formally that digital assets cannot function as a viable tool to bypass sanctions, while a cohort of top Israeli economists warned that such cryptocurrency-based circumvention tactics are almost exclusively associated with transnational criminal networks.
Israel’s stock market sees high volatility after election results
