Market Report / TA-25 Gains on Global Rally; Gov't Bonds at Record High

The index of blue-chip stocks closed above 1,200 for the first time this week, and Israeli government bonds rose in anticipation of a cut in rates.

The Tel Aviv Stock Exchange joined the global equities celebration on Tuesday, even if it had less to celebrate than Wall Street, where the Standard & Poor's 500 Index closed at a record high overnight.

Local investors partied modestly, with the TA-25 Index of blue chip stocks advancing 0.8% to close at 1,206.19. The market could at least take some cheer from the fact that the index closed above the 1,200 level after dipping below in the two previous sessions. But it is up just 1.7% so far this year and ended April down more than 2.5%.

The TA-100 Index also rose 0.8% and finished at 1,082.95. Turnover was just over NIS 1 billion. The market's gains were broad based, but banks and insurance companies paced the rise.

Government bonds, on the other hand, rose sharply and closed at a record high. Ten-year shekel bonds, which are not linked to the inflation rate, rose 0.28%, cutting their yield to 3.52%. Linked bonds for the same maturity climbed 0.45%, trimming yields to 1.43%.

Analysts said bonds rose in anticipation of an imminent rate cut by the Bank of Israel as it tries to stem the appreciation of the shekel against the dollar. On Tuesday, the central bank intervened in foreign currency trading to the tune of $100 million, but analysts said it would have to employ interest rates if it expects to change the trend.

For the day, the central bank could chalk up a small victory: The dollar strengthened by 0.06% to a Bank of Israel rate of NIS 3.5940. The euro, however, lost 0.1% to NIS 4.6956.

U.S. stocks were also dragged lower on Tuesday as investors took profits after the recent rally that pushed the S&P 500 to a record closing high the day before. They were also weighed down – as were European stocks – as an unexpected contraction in business activity in the American Midwest added to worries about economic growth. The Institute for Supply Management reported that business activity in the Midwest contracted in April to its lowest level since September 2009.

The S&P 500 was down 0.3% at 1,588.23, and the Nasdaq Composite Index was down 0.1% at 3,303.96 in the late morning New York time. MSCI's world equity index was up 0.2%, while the pan-European FTSEurofirst 300 Index was down 0.4%.

On the TASE, Lev Leviev's Africa Israel Investments jumped 5.7% to a close of NIS 8.68. Israel Brokerage and Investments said Tuesday it rated the stock "neutral," but from its opening price Tuesday, the stock has some 40% to go to reach its target price of NIS 11.50.

Babylon, the online translation company, recovered from the beating it took a day earlier, adding 1.7% in unusually heavy trading of NIS 66.7 million. Theshares plummeted Monday, after the company revealed that CEO Alon Carmeli plans to retire, and remained downmost of the session Tuesday as Carmeli and two deputy CEOs sold shares worth about NIS 4 million apiece through the company's stock options program.   

Teva Pharmaceuticals rose 0.9% on turnover of NIS 84.5 million, the highest of the day, despite the fact that Morgan Stanley reported distressing news about the company's flagship product, Copaxone. Morgan said the multiple-sclerosis treatment's share of new prescriptions for the disease has fallen to 11.8% from more than 38% sinceBiogen Idec launched its competing pill, Tecfider, three weeks ago.

Brack Capital closed 6.5% higher, topping the gainers on the TA-100, after it announced that it had signed an agreement to purchase 96% of a rental property in northern Germany at a valuation of 65 million euros. The property is 100% occupied and generates NIS 32 million in annual revenue, Brack said.

Reuters contributed to this report.

AFP