Israeli Markets Plunge Amid Political Uncertainty Following Defense Minister's Dismissal
The recent news regarding the potential dismissal of Defense Minister Yoav Galant has sent shockwaves through the Israeli financial markets. According to a report from Globes, the Tel Aviv Stock Exchange and foreign exchange markets have experienced significant declines, reflecting investors' growing fears over political instability. The shekel saw a drop of 0.5% against the US dollar, worsening to a 1% decline as the day progressed.
On the Tel Aviv Stock Exchange, the Tel Aviv 35 Index fell by more than 1% after initial reports surfaced, despite a positive start earlier in the day. The negative trend continued with a further 0.65% decrease, as the shekel weakened against both the dollar and euro. Jonathan Katz, chief economist at Leader Capital Markets, noted that the potential dismissal reinforces concerns that a ceasefire agreement in Gaza is unlikely, potentially leading to a credit rating downgrade and further declines in the stock market.
Yossi Frank, head of financial risk management at Energy Finance, described Galant's potential removal as a signal of political chaos, heightening the risk of conflict in Lebanon. He emphasized that the current market activity is largely driven by speculators capitalizing on the confusion, with financial institutions and exporters contributing to the sell-off of dollars. This turmoil coincides with the ongoing war in Gaza, exacerbating the economic and political uncertainties facing Israel.
