Market report / Shares retreat in face of U.S. budget crisis
Bearish economic news, much of it from the U.S., could continue weighing down the TASE through the rest of the week.
It was a little slow on the uptake, but the Tel Aviv Stock Exchange finally acknowledged Monday that there is indeed a fiscal crisis in the United States. It ended the day lower, with both the dollar and euro posting big losses on the shekel.
The benchmark TA-24 index, which rose sharply on Sunday, ended 0.5% down on Monday, at 1,264.98 points, with turnover reaching a heavy NIS 1.73 billion. The broader TA-100 index was also 0.5% down at 1,142.51.
The U.S. government was poised for a shutdown at midnight Monday, after the Democratic-controlled Senate rejected a funding measure that would delay reforms promised in the 2010 healthcare overhaul. Failure to reach an agreement to extend funding with the Republican-dominated House of Representatives would force federal agencies and programs to close or partially close for the first time in 17 years.
The U.S. crisis foreshadowed other potentially bearish news on its way this week, said Ran Shahar, head investments manager at Alfa Platinum Investment Management.
"The Tel Aviv bourse traded under the shadow of a host of global events this week – U.S. unemployment data, which are due on Friday, the purchasing managers’ index, also to be published this week, the October 1 budget approval in the U.S. and worries about the collapse of the Italian government," he said.
On Wall Street, the Dow Jones industrial average dropped 0.7% to 15,154.07, the S&P 500 lost 0.6% to 1,682.5 and the Nasdaq Composite dropped 0.4% to 3,767.19. The FTSEurofirst 300 fell 0.7% to 1,246.27, after initially dropping to a three-week low of 1,241.78, with the European volatility index surging 12%.
Meanwhile, the dollar dropped against an array of global currencies. At noon New York time Monday, the greenback traded 0.5% lower against a basket of major currencies, to trade at 80.154, after earlier reaching its lowest since February. The euro gained against the dollar to trade 0.1% higher at $1.3534.
Against the shekel, however, both currencies lost close to 1% of their value on Monday, with the greenback's Bank of Israel rate set at NIS 3.5370 and the euro's at NIS 4.7734.
In the local bond markets, the Tel-Bond 20, 40 and 60 indices were down as much as 0.11%. The government's 10-year Shsahar bond was off 0.4%, while its similarly dated Galil inflation-indexed bond was down 0.22%.
Equities trading on the TASE Monday was dominated by MIgdal Insurance, whose shares dropped 2% on turnover of NIS 270.6 million, making it by far the volume leader for the day. Leumi Partners, the investment banking arm of Bank Leumi, sold some NIS 305 million of Migdal stock to institutional investors. The block was equal to about 4.8% of all of Migdal's outstanding shares.
Israel Chemicals reversed a brief rally on Sunday to end 2.9% lower Monday, as NIS 110.5 million in shares changed hands. ICL shares have been convulsed by a rapid series of developments in the global potash market over the last weeks. On Monday, The Wall Street Journal reported that Indian Potash had renegotiated an annual contract for the import of the crop nutrient at a more than 12% discount, following the breakup of a global fertilizer cartel led by Russia's Uralkali.
Among the biggest losers in Monday's trading, Ceragon, a maker of cellar network backhaul gear, dropped 3.3%, Allot Communications fell 2.7% and Oil Refineries Ltd. by 2.4%.
Many of the top gainers were in the biotech sector, including Compugen (up 3.7%) and Clal Biotechnology (up 2.9%). ICecure Medical shot up 9.3% on heavy turnovers by the close of trading, after the maker of a treatment for symptomatic breast fibroadenoma said it received its first order for use in a Japanese clinical trial.
Reuters contributed to this report.