Shares of Israeli companies traded in the U.S. slumped on Monday after the country’s parliament passed the first part of judicial reform legislation that has brought protestors out in the tens of thousands for more than 28 weeks. Country-themed exchange-traded funds also fell in contrast to gains across broad U.S. market indexes.

Defense giant Elbit System (US:ESLT) stock was off 2.2% in late morning trading. Shares of SolarEdge Technologies (US:SEDG) were off more than 1%, as was monday.com (US:MNDY) stock.

The Knesset passed a law on Monday that limits the Supreme Court’s ability to overturn decisions made by government ministers, part of a broader and quite contentious push to curb the influence of the judiciary by a right-wing governing coalition led by Prime Minister Benjamin Netanyahu.

ARK Israel Innovative Technology ETF (US:IZRL) shed 1.5%, followed by the VanEck Israel ETF (US:ISRA), which was down 1.4%. The iShares MSCI Israel ETF (US:EIS) dropped 1% as the BlueStar Israel Technology ETF (US:ITEQ) slipped 0.6%.

The TA-35 index closed down 2.2% earlier today. Israel’s currency, the shekel, depreciated 0.7% to 3.64 to the U.S. dollar. According to Bank of Israel calculations, every weakening of the shekel by 1% brings an increase of 0.1-0.2 percentage points of inflation. 

Tel Aviv's Leader Capital Markets chief economist Yonatan Katz told local business news outlet Globes that the political uncertainty in Israel is the element driving the strong volatility on Israel stock and foreign exchange markets.

Earlier this month, Bank of Israel Governor Amir Yaron said: "I have said several times in the past that due to the promotion of such reforms there was an increase in the level of uncertainty in Israel’s economy, reflected in, among other things, the excess depreciation of the shekel and the underperformance of Israel’s stock market."