Market report / TASE feels Obama hangover
The TA-25 index of blue chips finishes 1.4% lower at 1,212.20 while the TA-100 dropps 1.6% to 1,073.02.
Tel Aviv Stock Exchange shares joined world markets on Wednesday in ending lower in the wake of U.S. elections overnight and a lower growth outlook for the euro zone.
The TA-25 index of blue chips finished 1.4% lower at 1,212.20 while the TA-100 dropped 1.6% to 1,073.02.
The TA-Banking index, which dropped on Wednesday, rebounded yesterday to advance 0.3% to 1,079.74, all on a paltry turnover of just NIS 504 million. TA-Banking index dropped 2.2%% to a close of 1,093.42 while the Bluetech-50 was off 2.8% to a close of 323.06. The Real Estate-15 index, however, declined a more moderate 0.5% to 288.57.
World shares and the euro fell Wednesday as traders turned their focus to the festering fiscal problems in the United States and Europe after the re-election of President Barack Obama signaled no dramatic shift in U.S. economic policies.
The FTSE Eurofirst 300 index of top European shares slid 1% to 1,103.62.in early trading, the Dow Jones industrial average was down 1.8%, at 13,005.38. The Standard & Poor's 500 and Nasdaq Composite indices were both down 1.9%, at 1,401.82 and 2,956.36, respectively.
Concerns persisted whether Obama could reach a timely deal with Republican lawmakers to avert $600 billion in automatic tax hikes and spending cuts set to kick in on January 1. Economists warned such a move would tip the America into a recession.
"The global financial markets went to bed with Obama and woke up with Obama," said Yaniv Pagut of Ayalon Group. From their perspective, nothing has fundamentally changed. Going forward, we expect more of what we saw in the United States in recent years; zero interest rates, printing of dollars via quantitative easing and a slow and frustrating economic recovery."
Meanwhile, the European Commission said the economy of the 17 countries sharing the euro would grow only 0.1% in 2013 after a bigger than previously forecast 0.4% contraction this year as a result of the sovereign debt crisis. Growth is predicted to rebound to 1.4% in 2014. European Central Bank President Mario Draghi said the ECB expects the euro zone economy to remain weak "in the near term."
Locally, the market was also influenced by a raft of earnings reports. Geothermal-power company Ormat Technologies fell 5.7% after it reported a $582,000 loss for the third quarter. Higher sales costs cut operating profit by 42% and erased the impact of increased revenue. Perrigo dropped 5.3%. Fiscal first-quarter profit for the generic drug maker rose 50% to $1.12 a share but revenue came in well below expectations of $1.24.
Bank Hapoalim economists, however, remain sanguine about quarterly earnings, most of which have yet to be reported.
"In recent quarters many companies have been forced to change their cost structures to adjust to domestic and global slowdowns," the bank said in a report. "Therefore, they will enjoy improved costs until growth returns on the income side, something that didn't happen in the third quarter."
Magic Enterprises, the software maker, gained 1% as non-GAAP net income for the third quarter increased 13% to $4.5 million from the same period last year and revenue increased 9% to $32.6 million. Liveperson sank 18.6%. The chat software maker lowered its earnings guidance for the fourth quarter to between seven and nine cents a share, compared with a Thomson Reuters consensus estimate of 10 cents.
Reuters contributed to this report.