Last update - 00:00 18/03/2008
Israeli stocks rebound after latest tumble, dollar does not
By Nathan Sheva, TheMarker Correspondent and Staff
Israeli stocks rebounded on Tuesday after they dropped steeply on Monday as U.S. and European shares wilted after Bear Stearns' implosion late last week and the investment bank's takeover by JPMorgan Chase & Co.
The dollar, however, continued to decline and reached a new low of NIS 3.38 as traders expect the U.S. Federal Reserve to drop interest rates a full percentage point.
After dropping four percent on Monday, the TA-25 blue-chip index has risen 1.9 percent on Tuesday. On Monday, Hoping to shore up the markets, Fed chairman Ben Bernanke took the extraordinary step of lowering the rate charged to banks. Wall Street was thus able to claw back from deep negative territory to end flat.
Tel Aviv stocks had been relatively robust, and the shekel has stood strong against major currencies. Monday the shekel bounded ahead some more: The dollar weakened by 1.4% against the Israeli currency, while the euro weakened by 0.2%. But stocks took a pounding as Israelis succumbed to the gloom pervading Asian and European markets, above all fear of more bad news from the United States.
Trading in Tel Aviv started with a dip of 1% as players waited for European action to start. When it did, with a drop of about 2%, Tel Aviv's indices slid.
Property stocks and banks were particularly hard hit. Real estate has been the focus of much investor ire despite local companies' protests that they are not exposed to the U.S. subprime meltdown.
Even so, the large-cap property developers, mainly the ones operating abroad, may have trouble borrowing to continue expanding their business because of the credit crunch.
The 4% fall by the TA-25 blue-chip index put it below 1,000 points, a key psychological barrier. So far this year, the index has tumbled 19%.
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