Decline in Tel Aviv Stock Exchange amid rising tensions

Shares in the Tel Aviv Stock Exchange fell on Sunday, which analysts attributed to investor concerns about judicial reforms that the Netanyahu government intends to adopt, as well as tensions after a Palestinian attack that killed seven settlers near a synagogue on the outskirts of Jerusalem, followed by a second shooting attack on Saturday.

Tel Aviv 35 blue-chip index fell by 1% during afternoon trading, while the broader Tel Aviv 125 index fell 1.7%. Government bond prices fell by about 1%. The currency market is closed Sunday, and the shekel fell 2% against the dollar during Thursday and Friday.

Stocks are falling “for the same reason the shekel is falling… concern about judicial reform,” said Jonathan Katz, chief economist at Leader Capital Markets.

On Friday, Netanyahu defended his government’s proposed legal amendment, which seeks to impose stronger political control over judicial appointments while weakening the Supreme Court’s ability to rule against legislation or policy. Opponents see the move as threatening the independence of the judiciary and undermining Israel’s system of democratic checks and balances.

Israeli Prime Minister Benjamin Netanyahu had vowed what he called a strong response to the two operations in occupied Jerusalem, and “strong” measures, including the immediate demolition of the homes of the perpetrators of the attacks.

“The shootings are just another factor” of negative sentiment in Israel, commented Gil Buffman, chief economist at Bank Leumi. He pointed out that concerns dominate the market about the continued weakness of the economy, inflation and the high budget deficit.