Israeli markets respond as post-election coalition path remains unclear

With 72.4% of all ballots counted in Israel, there is still a lot of uncertainty over whether any side will be able to form a governing coalition.

At 54 seats, the bloc led by Prime Minister Bibi Netanyahu has picked up more votes than what most exit polls had previously suggested, but is still short of the 61-seat majority needed to secure a governing threshold.

The opposition bloc, led by Gadi Eisenkot, currently has 48 seats, while Arab parties are at 18 seats.

Things can still change in the coming hours as votes continue to be tabulated, as well as those in double envelopes, which include ballots cast by active-duty soldiers and reservists serving at bases or deployed positions.

However, with no apparent path to a stable governing coalition, markets are starting to respond. The U.S. dollar (USD:ILS) climbed 1% against the Israeli currency to 3.08 shekels, while local stocks slipped in early trade, with the Tel Aviv 35 Index falling 1.7%.

Note that, during the past four years of the Netanyahu-led government, the Israeli stock market has boomed. Despite wartime shocks, the TA-35 Index has soared more than 130%, compared to the 100% return of the S&P 500 over the same period.