Israel's stock market sees high volatility after election results

The deadlock has weighed on the stock exchange's main indices, following optimistic expectations ahead of the vote Israeli election campaign displays depicting Gadi Eisenkot, leader of the Yashar party, and Avigdor Lieberman, leader of Yisrael Beiteinu party, by a highway in Tel Aviv, 26 October 2026 (Reuters) Published date: 29 October 2026 13:30 GMT | Last update: 10 sec ago High volatility has been recorded since Israel’s elections on Tuesday, with the Tel Aviv Stock Exchange’s main indices fluctuating throughout Wednesday and into Thursday morning, the Israeli economic daily TheMarker reported. According to the report, sharp declines were recorded on Wednesday in the TA-35 and TA-125, two of the local stock exchange's main indices, which fell by 1.8 percent and 2.5 percent respectively. On Thursday morning, however, the indices showed some recovery, the outlet noted. Nissan Avraham, an Israeli economic expert, told TheMarker that "part of the decline reflects a correction of the optimistic expectations that had built up ahead of the vote", adding that the market had wanted a clear political resolution. "The possibility of a deadlock and prolonged uncertainty weighed on trading," Avraham said, referring to the inconclusive results of the Israeli elections. Nevertheless, Avraham said that past experience indicates that the Israeli stock exchange usually bounces back from sharp declines. New MEE newsletter: Jerusalem Dispatch Sign up to get the latest insights and analysis on Israel-Palestine, alongside Turkey Unpacked and other MEE newsletters "In the short term, trading is expected to remain volatile and to react to political developments," he said, adding that in the long term, investors will look "to examine developments from a broad perspective, beyond the fluctuations of a single trading day". The high volatility on Wednesday also included sharp declines in the banking, insurance and real estate indices, the Israeli news site Ynet reported. It added that the Tel Aviv Stock Exchange's third main index, the TA-90, fell by 4.6 percent. According to the report, the Israeli currency also lost value after months of strong trading. The shekel depreciated against the US dollar and the euro, which at one point on Wednesday were trading at 3.13 and 3.47 shekels respectively. 'The stock exchange got punched in the face' Yosef Freiman, an Israeli market risk management expert, told Ynet that "the euphoria" in the Zionist opposition bloc on Tuesday night had led "to a collapse of the dollar's exchange rate against the shekel". However, updated exit polls, which showed Netanyahu’s bloc winning more seats than initially expected, then “raised concerns and led to a renewed depreciation of the shekel”, Freiman added. Netanyahu is going nowhere until Israel's Palestinians are taken seriously Read More » As Israel's Central Elections Committee entered the second day of counting votes on Thursday, Prime Minister Benjamin Netanyahu's far-right bloc held 53 parliament seats, while former army chief Gadi Eisenkot's Zionist opposition bloc held 48 seats. The Joint List and Ra’am, the two Palestinian-led parties, hold a combined 19 seats in the Knesset, making them instrumental in replacing Netanyahu’s ruling coalition, which had lost 15 seats as of Thursday morning. Referring to a Zionist-led government, an op-ed in TheMarker said that "the stock exchange prayed for a change of government and got punched in the face", adding that "the economy doesn't like the results". The volatility over the past two days follows an uproar in Israel after Netanyahu indicated that he was considering using cryptocurrency to weaken the effectiveness of international sanctions on Israel. Israel's Central Bank rejected Netanyahu's remarks, saying that "crypto coins can't serve as a way to bypass sanctions", while top Israeli economists said that using cryptocurrency "is common among criminal organisations". Middle East Eye delivers independent and unrivalled coverage and analysis of the Middle East, North Africa and beyond. To learn more about republishing this content and the associated fees, please fill out this form. More about MEE can be found here.