What happened in markets
Traders hit the sell button as the vote looked too tight to resolve who governs next. The shekel lost about 1% versus the dollar, marking its steepest intraday drop in two weeks and landing among the worst performers globally on Wednesday. Stocks in Tel Aviv fell 2.7%, putting the benchmark on track for its largest one-day decline since June, while Bank Hapoalim BN slid about 4% and Phoenix Financial Ltd. fell more than 5%.
Government uncertainty and debt signals
With only half the ballots counted, Prime Minister Benjamin Netanyahu was edging ahead of opposition leader Gadi Eisenkot, and both said they expected to lead the next government. It could be several weeks before a new government's composition is settled. In credit markets, Israel's dollar bonds trailed both regional and broader emerging-market benchmarks, while the yield on $2 billion of notes maturing in January 2036 climbed to 5.9%, halting a week-long slide, Bloomberg data show.
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What this means for your portfolio
Piotr Matys of ITC Markets, where he is a senior foreign exchange analyst, said the shekel's move "implies that the market is disappointed that the Eisenkot-led bloc was not able to deliver a decisive blow to the pro-Netanyahu bloc," adding, "Israel could be facing a period of tense political bickering." In plain English: expect politics to remain a driver for Israeli assets until coalition talks conclude.
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