Israeli stocks, which powered to successive record highs this year even as its war in Gaza ground on, are coming back down to earth as the country’s international isolation grows.The Tel Aviv Stock Exchange 35 Index fell Tuesday for a fifth straight session, bringing its losses for the period to 2.6%. The selloff deepened after Prime Minister Benjamin Netanyahu acknowledged Israel’s seclusion and underscored the need for self-reliance to withstand any sanctions. “The costs of endless wars on all fronts in terms of lost growth, emigration of human capital, worse international relations, greater domestic political polarization — and arguably — no better security all weigh on Israeli asset prices,” said Hasnain Malik, a strategist at Tellimer in Dubai. “PM Netanyahu’s latest speech that urges preparedness for more economic autarky reinforces those concerns.”.Israel Starts Long-Threatened Ground Offensive On Gaza City.Investor sentiment is shifting from the resilience that took hold in the wake of Hamas’s Oct. 7, 2023, attack on Israel. After panic selling in the immediate aftermath, the Tel Aviv index rebounded and had rallied 83% through last week — adding more than $200 billion to shareholder wealth. Stocks gained as investors bet on the economy avoiding a collapse, and the country joined a global technology surge. Defense companies saw orders rise, and were rewarded with higher stock prices.However, market optimism hit a wall in the past few days as Israel came under criticism from the US as well as a growing comity of friendly nations for its intense push into Gaza City and an attack in Qatar. Images of starvation deaths and widespread destruction fueled calls for an end to the war, both at home and abroad.The market has missed out on the rally in global stocks driven by expectations for Federal Reserve interest rate cuts.The equity benchmark fell as much as 2.3% on Tuesday, before paring the slide to 0.3%. The selloff spanned sectors, with 18 of the benchmark gauge’s 35 stocks falling. Teva Pharmaceutical Industries Ltd. and Mizrahi Tefahot Bank Ltd. contributed the most to the drop..Gaza ‘Genocide’: Israel To Face Arms Embargo? What UN Commission Recommends.The Israeli Business Forum, whose members include the leaders of the nation’s largest companies, said Netanyahu is pushing Israel into a dangerous and unprecedented economic and political slump. The latest economic data back the forum’s concerns: Israel’s preliminary annualized figures for gross domestic product in the second quarter showed a drop of 4%, according to the Central Bureau of Statistics.“Israel isn’t Sparta, such vision will make it difficult for us to survive in an evolving global world,” the forum said in a statement Tuesday. “The government must urgently promote ending the longest war in Israel’s history, the release of all hostages, and a date for elections.”Before the recent selloff, Israeli stocks had been among the world’s best performers this year. The TA-35 index gained 26% through Sept. 9, rising to a record high..But technical patterns signaled that those gains had overheated the market. The relative strength index, an indicator of momentum on the equity benchmark, traded near a threshold often seen in overbought markets. Another signal called the moving average convergence-divergence witnessed a bearish crossover.Israel’s other assets were mixed on Tuesday. The shekel was up, and sovereign dollar bonds were little changed..Israel Has Committed Genocide In Gaza, Says UN Commission Of Inquiry