Market report / Stocks rally on earnings, Europe
Traders say a possible Israeli military strike against Iran remained a topic of concern but took a backseat to more bullish news.
The Tel Aviv Stock Exchange yesterday reversed its Monday slump, cheered by a string of positive corporate earning reports and some fresh reasons to hope that stimulus measures will be undertaken in Europe to revive the continent's beleaguered economies.
Traders said a possible Israeli military strike against Iran remained a topic of concern but took a backseat to more bullish news.
The benchmark TA-25 index closed up 0.7%, at 1,091 points, while the broader TA-100 index added 0.6%, to 978 points. The Banks 5 index, which has borne the brunt of this week's declines, made an even sharper turn, rising 2.7% largely by Bank Leumi shares to close at 798 points.
European shares advanced yesterday in a broad-based rally, as investors focused on expectations of fresh stimulus measures from the region's policymakers. Second-quarter GDP results from France and Germany beat forecasts, easing concerns about the euro zone's two largest economies. The region as a whole contracted over the period, maintaining support for the case for ECB action.
The FTSEurofirst 300 provisionally closed 0.6% higher, at 1,101 points, after losing 0.4% in Monday's session.
Some relief was also evidenced in the foreign currency market. The dollar yesterday retreated from its gains on Monday to settle at a representative rate of NIS 4.03. The euro, which briefly breached the NIS 5 barrier, also weakened against the shekel to close at a representative rate of 4.98 yesterday.
Communications shares rallied on the back of second-quarter earnings reports by Cellcom Israel and Partner Communications (Orange ). Both companies reported sharply lower earnings (see story on page 12 ), but cost-cutting enabled them to maintain or even increase their profitability, said Rami Rosen of Harel Finance.
Cellcom jumped 5.1% and Partner by 5.4%. The communications index rose 2.7%, boosted by other companies as well: HOT Telecom advanced 3.5%.
"What improved the atmosphere [yesterday], beyond the somewhat overdone correction we had seen in the past few days, were the earning reports of the cell companies," said Tali Mitrani, investments department manager at Epsilon Investment House.
"Their second-quarter reports showed better earnings and surprisingly good cash flows," she said.
Among technology shares, Babylon gained 9.1% after analyst Eran Yaakobi of DS Investment House gave it a Buy recommendation and raised his target price for the share 50%.
Not all tech shares joined the rally. Liveperson sunk by just over 5%, while Given Imaging and Mellanox both ended 2.6% lower for the day.
In the bond market, the Tel Bond indexes registered gains of up to 0.2%.
"The bond market this week has experienced sharp redemptions; the continued volatility demonstrate the uncertainty and worries that have gripped the market," Epsilon's Mitrani said. "Government bonds continued the sharp drops that characterized their trading all of last week, all amid a widening fiscal deficit and unending media reports" of an imminent Israeli strike against Iran, she noted.
Mitrani said anxiety over Iran has also spread to corporate bonds, putting prices under pressure.
Elbit Systems finished the session yesterday unchanged. One day after it announced that long-serving CEO Yossi Ackerman would step down next April, the defense electronics manufacturer yesterday issued second-quarter earnings that showed non-GAAP operating profit attributable to shareholders rose 24% to $67 million.
Apparel maker Tefron, which is recovering from bankruptcy two years ago, turned a second-quarter profit of $1.3 million, mostly due to tax gains. The shares ended yesterday unchanged.
Tau Tsuot, the holding company controlled by Ilan Ben-Dov, reported yesterday that Bank Leumi was seeking immediate repayment of debt owed it. Tau also said holders of its Series B bonds voted to support a new debt settlement proposed by the company on Sunday after a year of negotiations. Tau shares fell 7.1% yesterday.
Reuters contributed to this report.