Markets fall on fears of socialist pressures

Both the shekel and the stock market lost ground following the announcement and traders raised fears of further falls.

"No one knows what's going to happen," said Michel Mizrahi at Bank Leumi. "In the short term the shekel may go weaker."

Analysts said much will depend on Mr Peretz's upcoming declarations concerning budget deficits or inflation targets.

"If he is against the main principles of globalisation it could be a problem," said Yoram Gabbay of Bank Hapoalim. "But if he continues only to deal with social issues then the impact on the economy will be very low."