Last Thursday Tel Aviv investors went home for the weekend with a bitter taste in their mouths and a lot of questions about the future. Yesterday morning it quickly became clear that what started last week as spate of serious losses turned into a real crash yesterday on this week's first day of trading.

The drop in Tel Aviv - in almost every security and asset class traded on the Tel Aviv Stock Exchange (TASE) - came on the heels of steep losses in world markets at the end of last week.

After months of gains and new record highs, yesterday was a particularly bad day for managers of mutuals funds, which showed redemptions of NIS 1.5 billion. Exchange Traded Funds (ETFs) also saw hundreds of millions of shekels transfered to other investment directions.

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Also, a number of companies' planned public offerings are considered to be in jeopardy of cancellation.

All of the market's indexes suffered exceptional losses. The TA-25 blue chip index lost 4.21 percent, to close at 1,089.3 points. The TA-100 fell even farther, 4.35 percent, to close at 1,068 points. The Yeter-50 index of mid-cap shares crashed by 7.61 percent, the TelTech-15 technology index lost 4 percent and the Real Estate-15 fell 6.07 percent.

The color red dominated yesterday as not a single company in the 100 largest firms included in the TA-100 managed to escape the trend. Teva (TASE: TEVA), one of the best performers recently, still lost 2.4 percent. Israel Chemicals (TASE: ILC) dropped 3.7 percent, Africa Israel (TASE: AFIL) crashed 7.14 percent and The Israel Corporation (ILD) fell 6 percent.

Turnover was extremely high. Stock trading totalled NIS 3.3 billion, while bond trading reached NIS 5 billion.

This morning, foreign investors will return from their weekend and forecasts are that they will wait to see what happens when Wall Street opens, late in the afternoon Tel Aviv time.

Bond markets were not spared yesterday either. Shekel-linked government bonds lost 2 percent while long-term Gailil bonds were down 2.3 percent. Shahar bonds continued their losses from last week, with the various Shahars dropping yesterday between 0.5-1.8 percent. The TelBond index, a measure of linked corporate bonds, lost 2.3 percent.

The dollar - considered the strongest alternative investment by some - continued to strengthen against the shekel yesterday. Even though there was no official trading in the dollar yesterday, as on all Sundays, options trading on the dollar-shekel rate reflected a 0.6 percent increase in the greenback against the shekel. On Friday the dollar rose 1 percent against the shekel, and the representative rate was set at NIS 4.321. The dollar has risen 10 percent against the shekel since the middle of May.

Prisma's mutual funds, which had already been suffering from big redemptions recently, led in having customers pull out their money, as another NIS 250 million fled Prisma yesterday. Migdal's funds also saw NIS 250 removed, Psagot-Ofek had NIS 220 million leave, and Pia said good-bye to NIS 200 million. Most of the redemptions came in bond funds.