Israeli Markets Rebound From Election Jolt, Still Nervous About Long Term

YERUSHALAYIM -

Israel’s currency market bounced back on Thursday, along with markets elsewhere, as the dollar quickly recovered from the surprise election results of Wednesday.

The shekel was up 0.98 percent against the dollar from Wednesday’s representative rate at NIS 3.832/$, and was down 0.96 percent against the euro at NIS 4.178/€, Globes reported.

The story was the same at the Tel Aviv Stock Exchange. Having risen 1.22 percent on Wednesday, the Tel Aviv 25 Index was up a further 1.07 percent at midday Thursday at 1433.78 points.

Pharmaceutical stocks were noticeably exuberant, reflecting general confidence that Trump will not impose the stricter regulation that Hillary Clinton was planning. Perrigo Company was up 6.87 percent, Teva rose 0.84 and Mylan was up 1.47.

“It looks very much like the market is simply adjusting to an unexpected result. Since everyone was expecting a Clinton win, the Trump result wasn’t priced in,” Dr. Asher Meir, head of economic research at the Kohelet Policy Forum, told The Jerusalem Post. “It doesn’t look like the market is fluctuating completely out of order and is already visibly balancing.”

Dr. Assaf Zimring of the Cornerstone Research Group agreed:

“As of this morning it seems that the U.S. markets had time to digest the news of Trump’s election, and the indexes have stabilized since. There are still reasons to be pessimistic, but we’ll need to assess the global markets in a few months to see.”

However, Israeli analysts were cautious about the longer term impact of a Trump presidency.
“If Trump actually implements the protectionist agenda he campaigned on, it’s likely to trigger China and Europe into a trade war, which will be especially harmful for world markets,” Meir said.

Ori Greenfeld, chief economist and strategist at Psagot Investment House Ltd., warned of a potentially disastrous trade war between the U.S. and China, if Trump intervenes in trade with that country.

“If Trump really attempts to fulfill his promises toward China, it will cause the Chinese economy to slow down, and it’s not been doing that well anyway in the past few years,” he said.

Nor will Israel’s economy be immune to the fallout from such a development. According to Zimring: “If Trump, for example, cuts imports from China, it would mean that China will have less dollars to spend on foreign trade and will in turn cut imports, too. Now, the repercussions of China cutting imports can influence other economies that export to China; Israel is one of those economies.”

However, Zimring noted that legal and political experts in the U.S. do not think that the president has the power under the Constitution to do most of what Trump promised in his campaign.