Israel election markets: what investors watch as Netanyahu faces Eisenkot on 27 October

Israel votes on 27 October in a parliamentary election in which Prime Minister Benjamin Netanyahu is fighting for political survival against former army chief Gadi Eisenkot. Turnout stood at 16.68% at 10 a.m. local time, above the 15.9% recorded at the same hour four years ago, according to the Central Elections Committee.

For investors, the israel election markets question centres on the shekel (USD/ILS), Tel Aviv equities including the TA-35, Israel government bonds and the direction of fiscal and security policy. JPMorgan estimates the result could swing the shekel by up to 3%.

What happened

Israelis went to the polls on 27 October, with turnout at 31.5% by noon, according to the Central Elections Committee. IST.

US stock futures were steady on the morning of 27 October after a tech rally lost pace, while politics stayed in focus as oil prices rose, according to a market report that day. Reports ahead of the vote also pointed to tension between Netanyahu and IDF chief General Eyal Zamir over Iran attack plans, with projections showing possible gridlock.

What are the key market gauges?

• Shekel: JPMorgan sees a possible move of up to 3% on the outcome.
• Turnout: 16.68% at 10 a.m. and 31.5% at noon on 27 October.
• Bank of Israel rate: unchanged at 3.25% at its latest decision.
• Security backdrop: Israel and Iran exchanged fire on 8 June 2026 for the first time in two months, and Tel Aviv shares fell that day while the shekel weakened.

Why it matters

The election matters for markets because the next government will set the fiscal course and the tone on regional security, both of which feed into the shekel, equities and bond yields. A coalition in the Knesset able to govern would shape how quickly policy uncertainty fades.

The Bank of Israel noted in its rate statement that, during the reviewed period, Israel's risk premium remained at levels similar to those before 7 October 2023, and the shekel depreciated. That makes political risk a live variable for the currency and for Israel government bonds.

Fiscal strains are a second channel. Analysis published on 25 October pointed to soaring defence spending, rising debt, talent outflows and ultra-Orthodox exemptions as long-term economic challenges, despite strong headline growth. Whoever forms the next Israel coalition government inherits those pressures.

How have markets reacted to security shocks before?

Past episodes show how sensitive prices are to security news. On 22 June 2025, Tel Aviv shares hit record highs after US strikes on Iranian nuclear sites.

Risks and counterpoints

The outcome may not be clear-cut. Reports ahead of the vote pointed to a possible gridlock, which could delay coalition formation. Past Israeli elections, including the 2019 and 2021 rounds, were followed by prolonged counts and, in 2021, a fourth election in less than two years.

The Iran conflict adds another uncertainty. US President Donald Trump threatened another likely military operation against Tehran, though he said earlier in October that the US would not attack before the US midterm elections.

What to watch next

The first results are expected from the evening of 27 October, and the Central Elections Committee will publish official figures later. Market focus will be on the shekel's reaction against the dollar, the TA-35 at the next Tel Aviv session and moves in government bond yields.

• Official results and the seat count for each bloc in the Knesset.
• Any signs of coalition negotiations or deadlock.
• The next Bank of Israel rate decision, after the hold at 3.25%.
• Developments on Iran and Gaza that could shift the risk premium.