Israel's stock market opened sharply lower Monday as renewed fighting between Israel and Iran and losses on Wall Street weighed on investor sentiment.
After a brief delay to the opening, the benchmark TA-35 index initially fell about 2.5%, along with other leading indexes. Losses later moderated, with the TA-35 down about 1.3%, the broader TA-125 index off 1.5% and the TA-90 index falling 2.15%.
Sector indexes also posted declines. The communications and information technology index dropped 2.6%, the energy infrastructure index fell 2.7%, and the real estate index declined 2.2%.
The sell-off came after Iran and Israel resumed direct hostilities and followed a sharp decline on Wall Street at the end of last week. The Nasdaq fell nearly 4% on Friday after a stronger-than-expected U.S. jobs report reduced expectations for interest rate cuts and semiconductor giant Broadcom's results renewed debate over technology valuations.
“The trading week is opening against two major developments: the Iranian missile attack on Israel and the sharp declines recorded on Wall Street at the end of last week, particularly in the semiconductor sector,” said Or Poria, chairman of Poria Finance.
He said the U.S. market pullback should be viewed in context after eight consecutive weeks of strong gains led by technology and chip stocks.
“In that sense, the recent declines are not unusual but rather a natural correction after such a significant rally,” Poria said.
He added that despite renewed market expectations, he sees little chance that the U.S. Federal Reserve will return to raising interest rates in the foreseeable future.
“A slowdown in growth or a significant correction in equity markets would only further reduce the likelihood of such a move,” he said.