Tel Aviv shares plunge again as EU mulls cutting trade over Gaza offensive

Shares on the Tel Aviv Stock Exchange fell for a sixth consecutive day as the European Commission proposed to curb free-trade arrangements on Israeli goods, fueling uncertainty over the toll the offensive in Gaza City will have on the country’s economy.

The Tel Aviv Stock Exchange’s benchmark TA-125 index dropped 2% at the close of trading. The benchmark index has declined 2.4% so far this month, trimming its year-to-date gain to 25.3%.

The TA-35 index of blue-chip companies was down 1.9% at the close. The TA-90 index, which tracks the shares with the highest capitalization not included in the TA-35 index, fell 2.4%. The TA-Insurance index plunged 4.3%.

“There is concern that the European Union is exerting concrete pressure on the trade relations with Israel,” Mizrahi Tefahot Bank chief markets economist Ronen Menachem tells The Times of Israel.

“Every time we hear more direct criticism about Israel’s conduct in Gaza, it is fueling nervousness in the financial markets, creating uncertainty for investors about the implications of the offensive in Gaza City and the ongoing war with Hamas,” he says.

The markets have also been roiled in recent days by Prime Minister Benjamin Netanyahu’s statement that Israel was facing increasing isolation and may be required to become a self-reliant economy with “autarkic characteristics” and a kind of “super-Sparta.”

In response, the prime minister yesterday sought to reassure investors that he had “full confidence” in the Israeli economy and tried to clarify that his comments were focused on the defense industries rather than the broader economy.