Stocks spent most of yesterday well in the red, but retreated somewhat near the end of the day, as Israeli investors worried whether the 100 billion euro bailout of Spain would succeed in containing the European debt crisis. Losses on Wall Street on Monday and yesterday morning's drops in Asian markets also spooked local investors, but as European stock markets changed direction and rose during the day yesterday, the TASE followed suit in the afternoon. But trading, both locally and elsewhere, was quite volatile.
The benchmark TA-25 index ended the day unchanged at 1,080 points, while the broader TA-100 index fell 0.2% to close at 994 points. Most of the major indexes were in the red, though the TA-Banks index recovered 1.2% yesterday after a steep drop on Monday. Banks shares fell 1.2% during trading before recovering in the afternoon. The Real Estate-15 index fell 0.3% and TA-Insurance index dropped 1.5%. The Biomed index lost 1.7% and the BlueTech-50 index fell 0.9%. The Oil and Gas Exploration index lost 0.5%.
Turnover was once again low at NIS 944 million. But what stood out yesterday, despite the sparse volume, was volatility. The volatility index, the so-called Tel Aviv VIX, jumped 7.9% for the day after climbing over 12% during trading.
Large-cap corporate bonds, as represented by the TelBond-20, -40 and -60 indexes, lost 0.1% to 0.3%. The TelBond-Shekel index lost 0.2%. Government bonds were up slightly.
Among the corporate bonds that took a big hit yesterday were those of Ilan Ben-Dov's Scailex. Scailex Series 9 bonds plunged 11.5% to junk yields of 41%, as investors are facing Ben-Dov's sale - and possible haircut - of Scailex, which is the controlling owner of the Partner cellular company. Scailex shares dropped 6.9%. Isralom bonds lost 5% and reached junk yields of 31%-39%.
Kardan NV plummetted 7.8%, continuing recent losses. Eliezer Fishman's Jerusalem Economic Corp. lost 3.6% and B Communications lost 2.1%. Discount Investment, Israel's largest holding company, rose 2.9% for the day after dropping 7.8% during trading.
Dollar rising again
The dollar strengthened against the shekel yesterday, reflecting its gains against most major currencies in global forex markets. The greenback rose 0.65% against the local currency and climbed to a representative rate of NIS 3.889. The dollar crossed the $1.25-to-the-euro barrier yesterday as foreign exchange traders had their doubts about the ability of the Spanish banking bailout to solve Europe's economic problems. The euro also rose 0.3% against the shekel to a representative rate of NIS 4.865.
Raising the stakes in Europe's debt crisis, Austria's finance minister said Italy may need a financial rescue because of its high borrowing costs, drawing a furious rebuke yesterday from the Italian prime minister. Maria Fekter's assessment of the euro zone's third largest economy stoked investors' fears that Europe is far from ending 2-1/2 years of turmoil - a feeling reinforced by Dutch Finance Minister Jan Kees de Jager, who said the euro zone was "still far from stable".
Reuters contributed to this report.
