Israeli assets sold off Wednesday after the election produced no clear winner. Neither Benjamin Netanyahu's bloc nor Gadi Eisenkot's appears to have the 61 seats needed to form a government.
The Israeli shekel fell 2% against the U.S. dollar on Wednesday, while the Tel Aviv 35 stock index traded 2.3% lower. Israeli assets came under pressure as the election produced no clear winner: with more than 80% of the votes counted, neither side appears to have a coalition majority.
Yields rise across the bond curve
Israeli government bonds also came under pressure. The 2-year yield added 6 basis points, the 10-year benchmark rose 8 basis points, and 30-year yields gained 6 basis points.
Neither bloc reaches 61 seats
After falling behind in early counting, the pro-Netanyahu bloc clawed back a narrow lead of around 54 seats versus 49. Polls suggested Arab-led parties, which belong to neither camp, earned about 18 seats.
Eisenkot, a former military chief of staff, declared victory and said his bloc's slight lead should give him the first right to try to form a government. Exit polls are not the official results, which are published on Nov. 4.
Arab-party result is a factor in coalition talks
Analyst Amin Saikal said the pro-Palestinian stance of Arab-led parties aligns them more closely with Eisenkot than with Netanyahu, though neither man has said he would embrace them. Yisrael Beytenu leader Avigdor Liberman, whose party is projected at seven to nine seats, refused during the campaign to rely on Arab parties.
Saikal also said Netanyahu may use the upcoming weeks or months to try to stall the formation of a new government, even if Eisenkot wins more seats. P.R. Kumaraswamy expects a prolonged negotiation after the final results and said of Netanyahu: "It is too early to write him off."
Source: CNBC
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