Tel Aviv Stock Exchange Falls More Than 15% From Peak; Dollar Surges to Six-Month High

In depth

The Tel Aviv Stock Exchange has fallen more than 15% from its recent peak, and the leading indices dropped about 3% over the past week. Political uncertainty surrounding the formation of the government, together with a plunge in chip stocks in the US, pushed down the leading indices in Tel Aviv. At the same time, the dollar surged to a six-month high and crossed 3.22 shekels.

The dollar weakened 0.5% against the shekel in a single day, the euro fell by a similar amount and traded at around 3.54 shekels. The declining Wall Street index, the S&P 500, lost about 5% over the past month, but the strengthening of the dollar against the shekel offset a significant part of the losses for Israeli investors.

Pricing of the midterm elections led to a sharp downward revision of US stocks, but bond markets are signaling a return to normal. The public favored money market funds, and the fund industry closed a positive month, but traditional funds recorded unusual redemptions. Yoni Pening, chief strategist at Mizrahi Tefahot Bank, explains the trends in the global economy.