Market Report / Bernanke's Remarks Hit Israeli Shares, Boost Dollar

Investors fear that an early end to U.S. stimulus efforts could jeopardize the global economic recovery.

The global stock market tsunami set off by Fed chairman Ben Bernanke reached Israel a day later, though with nothing near the force it delivered in Asia and Europe.

The Tel Aviv Stock Exchange's benchmark TA-25 index fell as much as 1.7% on Thursday but recovered some of the loss and ended at 1,215.40 points – down 1.4%. The broader TA-100 closed 1.6% lower at 1,091.44 as turnover reached NIS 1.08 billion.

It was much worse in Asia. Japan's Nikkei index plunged 7.3% to 14,483.98. Singapore's stock index suffered its worst daily decline in a year, dropping 1.8% to 3,393.17. Hong Kong saw its biggest loss in seven weeks, with the Hang Seng index tumbling 2.5% to 22,669.68.

In Europe, the FTSEurofirst 300 index provisionally closed down 2% at 1,231.13 points, its biggest one-day fall since a 2.4% drop on July 23, 2012.The euro zone's blue-chip Euro STOXX 50 index declined 2.1% to 2,776.40 points.

Weakness in China's factory activity didn't help, but the big news was Bernanke's comments. He told a congressional committee late Wednesday that the Fed could scale back the pace of bond purchases at one of its next meetings, spooking investors who feared that an early end to U.S. stimulus efforts could jeopardize the global economic recovery.

Bernanke's remarks also took the dollar to three-year highs against global currencies. Versus the shekel, the greenback advanced 1% to a Bank of Israel rate of NIS 3.702, while the euro strengthened 0.5% to NIS 4.7678.

"The rise above NIS 3.70 is significant and is likely to pave the way to a further correction higher," said currency trader FXCM. "In hindsight, the Bank of Israel's timing in announcing its dollar-buying program was perfect, occurring in step with the dollar's major turnaround higher worldwide."

Mellanox, a maker of semiconductors, led the TASE lower Thursday, tumbling 5.2% after CEO Eyal Waldman told TheMarker that institutional investors could cause the company to delist the stock from TASE trading.

The TA Bluetech index fell 2.6%. Given Imaging, the maker of a camera in a capsule for diagnosing digestive ailments, dropped 4.2%, bringing its two-day tumble to more than 7%. Biotech company Kamada shed 2.3%.

Teva Pharmaceutical Industries fell 2.4% while Bank Hapoalim lost 1.2% and Israel Chemicals 1%. Other big losers were fashion chain Golf, which tumbled 5.1%, and Shari Arison's Housing & Construction Ltd., down 3.9%.

Some stocks survived Thursday's tremors. Bezeq, the volume leader with NIS 67 million in shares changing hands, climbed 1%. Supermarket chain Super-Sol advanced 2.1%, making it the TA-100's biggest gainer of the day.

Energy exploration companies Shemen and Zerah both raised money in rights offerings Thursday to fund drilling at the Yam-3 site. Demand at Shemen's NIS 43 million issue was high enough to let it enlarge the final sale to NIS 49 million. Zerah raised its offering to NIS 10 million after orders reached NIS 18.5 million. Shemen shares fell 3% and Zerah 1%.

Ratio, another energy explorer, rose 1.8% on turnover of nearly NIS 29 million.

TASE to extend trading day one hour

The TASE said Thursday it was extending the trading day one hour to 5:25 P.M. Monday through Thursday. The move, designed to increase volume, will go into effect on June 16. The exchange wanted to shorten trading hours on Sundays, a quiet day due to the lack of foreign investors, but the Israel Securities Authority objected.

With reporting by Reuters and Eran Azran.

AP / Ted S. Warren