Due to the Tisha B'Av fast day, there was no trading on Sunday on the Tel Aviv stock exchange. Trading here will have to wait until Monday to react to Friday's major gains in share prices in Europe and the United States.
Most of the dual-listed Israeli shares will open trading on Monday in Tel Aviv with positive arbitrage price gaps compared to Wall Street. Mellanox Technologies, for example, will be opening trade here will an arbitrage gap of 5.9%. For its part, Teva Pharmaceutical Industries shares gained 2.1% on Wall Street on Friday and will open with a positive arbitrage of 1%. Among other local stocks with positive arbitrage are Tower Semiconductor at a 5% gap, the biomed firm PhotoMedex at 4%, Protalix Biotherapeutics at 2.9%, Radvision at 3.9% and Partner Communications at 1.3%.
Stocks rallied on Friday overseas on expectations the European Central Bank will tackle high borrowing costs hitting Spain and Italy, but the euro pared gains on market uncertainty about the specific action to be taken. The benchmark S&P 500 closed at its highest since early May, climbing further after Bloomberg News said ECB President Mario Draghi would meet with Bundesbank President Jens Weidmann to discuss several measures, including bond purchases, to help the eurozone.
The French and German governments said they are "determined to do everything to protect the euro zone" and its single currency. The joint statement echoed similar remarks by Draghi on Thursday, but in comments on Friday, Germany's Bundesbank pushed back against Draghi's pledge. Adding to hopes for decisive action, U.S. Treasury Secretary Timothy Geithner will meet separately with his German counterpart and Draghi on Monday, the Treasury Department said. The heightened expectations about ECB intervention soon helped to push Spanish and Italian bond yields lower.
Expectations that the Federal Reserve will act to support the U.S. economy also grew after data showed U.S. gross domestic product expanded at a 1.5% annual rate from April through June, roughly in line with lowered expectations. Market expectations are high for another round of asset purchases from the Fed, which in the past have sparked rallies in stocks and commodities. Markets are also beginning to price in a move from the ECB, possibly in the form of bond purchases. Both central banks hold separate meetings this week. With reporting from Reuters.
