Market Report / Goldman Forecast Keeps TA-25 on Uptrend

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Wall Street ended lower overnight but Goldman Sachs' forecast that U.S. stocks still have room for considerable gains was enough to rouse the bulls in Tel Aviv on Tuesday.

Led by telecommunications stocks, the benchmark TA-25 index advanced 0.2% to finish at 1,232.23 points, bringing its gain over the past four sessions to 3.5%. That still puts it way behind much of the world, where stock markets have been touching record highs. The TA-25, by contrast, remained nearly 120 points short of its all-time record of 1,350.

The broader TA-100 index finished 0.3% higher at 1,108.79, while the TA MidCap-50, which has rallied this year, ended 0.1% lower at 529.64. Turnover was a middling NIS 1.02 billion.

Government bonds were lower, continuing the trend that began after the Bank of Israel's surprise rate cut last week. Ten-year shekel bonds were off 0.5%, raising the yields to 3.57%. Inflation-linked 10-year bonds declined 0.3% to a yield of 1.36%. Inflation-linked bonds have enjoyed increased interest amid expectations that hikes in the value-added tax and electricity rates will stoke inflation.

"The share market is continuing higher, with a tailwind provided by Goldman Sachs, which said today it expected the Standard & Poor's 500 Index to rise 26% by the end of 2015," said Asaf Shaul, deputy CEO of Alfa Platinum Mutual Funds. "We believe that so long as the [bond] market expects another interest rate cut before the end of the month, government and corporate bond prices will continue to rise, as will the risk, as yields decline."

Stock markets around the world were little changed on Tuesday as investors awaited an update on the future of the U.S. Federal Reserve's stimulus program.

The constant drip of stimulus provided by central banks around the world during the financial crisis has pushed many financial markets to their highest levels in years and limited market declines. But in recent weeks, officials at the U.S. Federal Reserve have started talking more openly about scaling back the bank's support. That has made last Wednesday's release of minutes from the central bank's most recent meeting and Fed chairman Ben Bernanke's testimony in Congress the main focus for markets waiting for the first sign of a clear shift in attitude.

After ending little changed on Monday, the S&P 500 Index was up 0.10% at 1,668.00 in late morning trading on Tuesday, while the Nasdaq Composite Index had edged up 0.08% at 3,499.05.

The pan-European FTSEurofirst 300 Index provisionally closed down 0.1% at 1,250.62 points, retreating from a five-year peak of 1,252.09 in the previous session. The Euro STOXX 50 benchmark of euro zone blue chips fell 0.4% to 2,814.75.

In foreign currency trading, the dollar and euro added to their gains on the shekel Tuesday. The greenback strengthened 0.4% to a Bank of Israel rate of NIS 3.6750, while the euro added 0.36% to NIS 4.7255.

On the TASE, telecommunications stocks rallied, with the TA Telecommunications index adding 2.4% to close at 561.57. Bezeq gained 3.4%, Cellcom Israel 3.1%, and Partner Communications 1.8%. Bezeq was due to raise about NIS 600 million on Tuesday in a private placement of additional Series 6 and 7 bonds.

Given Imaging, the maker of a capsule-sized camera for diagnosing digestive disorders, led TA-100 stocks higher on a 5.3% rise. The company said late on Monday that data from several European studies and presented at a key medical conference confirmed the effectiveness of its PillCam Colon capsule in detecting colonic lesions in patients following incomplete colonoscopies, and in monitoring digestive diseases.

Givot Olam, the partnership operating the Meged oil field, climbed 4.3% after it reported that it produced 44,000 barrels of oil in the first quarter – about the same as it had a year ago – but that net profit jumped to $2.5 million from $830,000.

With reporting by Reuters. 

Inside the Tel Aviv Stock Exchange.Credit: Bloomberg