Israel election deadlock could unsettle global markets

A deadlocked result in Israel’s parliamentary elections could increase uncertainty on global markets, Nigel Green, chief executive of financial advisory firm deVere Group, says. Polls cited by the group indicated that neither Benjamin Netanyahu’s bloc nor the opposition led by Gadi Eisenkot was on course to secure the 61 seats needed to form a government.

A parliament without a majority could lead to months of coalition negotiations or fresh elections, according to Nigel Green. He also points out that an interim government would retain the power to order further strikes against Iran. Investors will be watching in particular for possible effects on oil, bonds and emerging markets.

Israeli assets have risen despite years of conflict: since October 2023, shares listed in Tel Aviv have gained about 130% and the shekel nearly 25%. But both have fallen by about 10% since May, and analysts estimate the currency could fluctuate by up to 3% depending on the election result.

Nigel Green believes an Eisenkot victory could be welcomed by investors, while a Netanyahu win would be less surprising. Both candidates have, however, promised to maintain pressure on Hamas and Iran; their differences would mainly concern diplomatic tone and willingness to escalate. Strikes against Iran could push up energy prices, revive inflation and increase governments’ borrowing costs, according to the deVere Group chief.

The 27 October election is part of a campaign pitting Benjamin Netanyahu against Gadi Eisenkot, a longstanding rival of the prime minister. The first results published show the opposition with an estimated 52 to 53 seats, short of a majority, according to estimates released after the vote.