Israeli stocks fell sharply Friday, extending losses that have pushed Tel Aviv's benchmark TA-35 index down about 3% since Tuesday's inconclusive parliamentary election, as investors grappled with political uncertainty and the prospect of prolonged coalition negotiations.
The Tel Aviv Stock Exchange opened with losses exceeding 1%, with the blue-chip TA-35 index falling 1.6%, the broader TA-125 declining 1.42% and the TA-90 index of smaller companies shedding 0.83%.
The Tel Aviv Stock Exchange
(Photo: Shutterstock)
The declines marked a third consecutive session of market volatility following the Knesset election, which failed to produce a clear governing majority and left Israel facing uncertainty over the formation of its next government.
Technology and insurance shares were among the hardest hit Friday. The technology index fell 2.53%, while the insurance index dropped 2.56% and the financial services index lost 1.51%. Banking stocks declined 0.65%, while the real estate index slipped 1.09%.
Among major companies, semiconductor equipment maker Nova plunged 7.11%, chip manufacturer Tower Semiconductor fell 7% and semiconductor inspection equipment maker Camtek dropped 6.91%.
Insurance companies also traded lower, with Clal Insurance falling 1.71%, Harel Insurance declining 1.4% and Phoenix Financial losing 1.15%.
Markets struggle to recover from post-election selloff
Friday's losses followed two volatile trading sessions in which investors initially reacted sharply to the election results before staging a modest recovery.
On Wednesday, the first trading day after the vote, the TA-35 index fell 1.81%, while the broader market suffered even steeper declines.
The TA-125 dropped 2.46%, and the TA-90 plunged 4.47%, reflecting particularly heavy selling among smaller and mid-sized companies.
Real estate and financial stocks bore the brunt of the selloff. The construction index tumbled 8.77%, the real estate index lost 6.3%, the insurance index fell 5.24% and the banking index declined 4.98%.
The widespread losses underscored the market's sensitivity to the political uncertainty created by the election, which left the country's competing political blocs without a clear path to a parliamentary majority.
Thursday brought a partial rebound, although gains were modest and uneven.
The TA-35 rose 0.34%, while the TA-125 edged up 0.1%. Banking shares gained 0.72%, the oil and gas index advanced 1.1% and defense stocks climbed 0.66%.
Defense contractor Elbit Systems was among the session's stronger performers, rising 3.03%.
But the recovery failed to extend across the market.
The insurance index continued its decline, falling another 2.36%. Menora Mivtachim lost 2.97%, Phoenix Financial dropped 2.73% and Harel Insurance declined 2.06%.
The TA-90 also remained under pressure, slipping 0.59%.
Political uncertainty clouds market outlook
Friday's renewed selling erased much of the previous session's modest recovery, leaving the TA-35 approximately 3% below its pre-election level.
The three sessions have been marked by particularly sharp fluctuations in financial, real estate and technology stocks, although the losses have not been uniform across sectors.
The election's inconclusive outcome has added uncertainty over Israel's next government, with no political bloc securing a straightforward parliamentary majority.
That uncertainty comes as investors await clarity on the country's future economic policies, budget priorities and the political negotiations that will determine the composition of the next coalition.
While the election has coincided with a broad market decline, the figures alone do not establish how much of the selling is attributable to domestic politics rather than company-specific developments or wider market conditions.
For now, the benchmark TA-35's roughly 3% decline since the vote highlights the difficulty Israeli equities have faced in regaining momentum as the country's political future remains unsettled.