The Limited Times

Now you can see non-English news...

The Israeli stock market was painted red: prices fell due to the political situation Israel today

2023-02-12T14:52:13.903Z


The TA 35 index closed with a decrease of 0.3%, and the TA 125 index decreased by 0.8% • On the other hand, last Friday trading on Wall Street closed with price increases • The dollar continues to strengthen against the shekel and reached a level of 3.5350 shekels • If the sharp devaluation of the shekel, this may increase inflation


Contrary to the global trend:

the fear of the consequences of the legal reform, the warnings regarding the downgrading of Israel's credit rating and the statements regarding the withdrawal of funds from Israel painted the Israeli stock market red yesterday (Sunday).

The Tel Aviv 35 index closed at a 0.3% drop, and the Tel Aviv 125 index fell by 0.8%.

On the other hand, last Friday trading on Wall Street was closed with price increases, after during the trading day the leading indices traded in declines of more than 2%, but moderated towards the end of the day.

In addition, in the last week the dollar continued to strengthen against the shekel and reached a level of 3.5350 shekels last Friday.

As we wrote, if the sharp devaluation of the shekel continues, this may increase inflation and cause the governor of the Bank of Israel to raise the interest rate in the economy by half a percent next week, and not by a quarter of a percent as most economists estimated until a week ago.

The devaluation of the shekel against the dollar continues (for illustration), photo: Dodo Greenspan

"The devaluation of the shekel continues against the backdrop of political uncertainty and fear of capital outflows. This trend, if it continues in the coming week, could support an interest rate increase of 0.5% on February 20, depending on the January index of course," Yonatan Katz, Leader's chief economist, writes this morning Capital markets.

Also in a macro review by Alex Zebzinski, Chief Economist at the Meitav Investment House, it was written this morning under the title "The shekel is divorced from the S&P 500", that "investors in Israel have raised the forecasts for the Bank of Israel's interest rate increase"

Investors in Israel have raised their forecasts for the Bank of Israel's interest rate increase (for illustration), photo: Oren Ben Hakon

"The relationship between the exchange rate of the shekel and the American stock market, which results from hedging transactions of Israeli investments going abroad, which existed for the past five years, has changed recently.

In the last three weeks, the American stock market rose by 3%.

In accordance with the usual behavior, the rate of the shekel in relation to the dollar was supposed to strengthen by about 1%.

Instead, the shekel weakened by about 4%."

Zebzinski adds that: "The aforementioned relationship contributed significantly to the decrease in inflation in Israel in the last five years.

In the pattern of behavior that has existed in recent years, an annual increase of 10% in American stocks leads to a decrease of about 0.3%-0.4% in inflation in Israel.

On the assumption that the stock market should rise over time under normal circumstances, severing the link between the shekel and the American stock market will contribute to higher inflation in Israel in the future." Bottom line, Zebzinski recommends "underexposure to the Israeli stock market."

were we wrong

We will fix it!

If you found an error in the article, we would appreciate it if you shared it with us

Source: israelhayom

All news articles on 2023-02-12

You may like

Trends 24h

News/Politics 2024-03-28T06:04:53.137Z

Latest

© Communities 2019 - Privacy

The information on this site is from external sources that are not under our control.
The inclusion of any links does not necessarily imply a recommendation or endorse the views expressed within them.