Market Report

Dollar Sinks Below 3.5 Shekels as Shares Fall

Market waiting to see whether the Bank of Israel chooses to intervene and boost dollar; Given Imaging and Ceragon pick of the day's equities.

The dollar sunk below 3.5 shekels in foreign currency trading Monday as Tel Aviv Stock Exchange shares ended lower, led by energy and communications stocks.

The U.S. currency was fixed at a Bank of Israel rate of 3.5030, a loss of 0.4% for the day, while the euro edged 0.07% higher to 4.8063. The dollar dipped below 3.5 during the day and late Monday evening was trading at 3.4887.

“The challenge for the Bank of Israel will be to defend the low of 3.473 shekels in order to prevent a collapse in the exchange rate," currency trader FXCM said. "The market will be waiting to see whether the Bank of Israel chooses to intervene at this critical juncture.”

FXCM noted that 3.473 was the rate at which the central bank intervened massively last September. It also noted that, last week, the U.S. currency weakened against major global currency despite positive economic data in the United States.

In equities trading, the TA-25 blue chip index finished down 0.6% at 1,363.51 points, while the broader TA-100 lost 0.4% to 1,220.17. Turnover was a heavy 1.43 billion shekels ($408.2 million), with Given Imaging leading most actives with 122.1 million shekels ($34.9 million) changing hands.

Covidien, an Irish company, agreed to buy Given – the maker of a camera in a capsule for diagnosing digestive diseases – in a deal that values the company in excess of its Tel Aviv Stock Exchange market value. The shares climbed another 4.3% Monday, on top of the 21% rise posted Sunday.

In the fixed-income market, the government’s 10-year shekel bond rose 0.37% to cut its yield to 3.53%. Its inflation-indexed bond for the same term advanced 0.32%, to reduce its yield to 1.44%.

Stock markets worldwide rose Monday and the euro climbed to a six-week high against the dollar after Chinese trade and inflation data boosted optimism about the global economy.

In the early afternoon New York time, the Dow Jones industrial average was up 0.1% at 16,041.20 and the Standard & Poor’s 500 up 0.3% at 1,809.87. Europe’s FTSE EuroFirst 300 edged up 0.2%.

On the TASE, IDB Holding Corp. bonds posted losses of about 3.35%, a day after bondholders backed a rescue plan for the company led by Eduardo Elsztain and Motti Ben-Moshe, a move that all but brings to an end Nochi Dankner’s decade-long control. IDB Holding shares, whose trading was suspended Monday afternoon, plunged 17.6% when trading resumed.

Energy shares traded lower, with Givot down 5.1% and Modiin off 2.6%. The TA-Oil and Gas index was off 1.1% for the day at 1,270.16.

The Leviathan offshore gas field partners dropped after they reported that a development plan for Israel’s largest natural gas reserves had yet to be approved, noting, “At this stage we cannot yet determine the timetable for the development program.” Avner and Delek Drilling both fell (1.8% and 1.5%, respectively) and Ratio 0.4%.

Communications stocks were sharply lower, too, with the TA-Communication index falling 1.7% to 772.84 by closing. Bezeq dropped 1.8%, Partner Communications by 1.9% in heavy trading of 74 million shekels ($21.1 million) and Cellcom Israel by 1.2%

Ceragon jumped 9%, making it the top gainer among TA-100 stocks after Needham & Company initiated coverage with a Strong Buy rating and $8 price target, suggesting 217% upside from the stock’s Friday Nasdaq close.

Reuters contributed to this report.

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Reuters