Market Report / TASE Lauds CPI Data for January

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The Tel Aviv Stock Exchange ended higher as investors chose to put a positive on the negative consumer price index released on Friday and shrug ofF the unhappy new economic growth data that came out on Sunday.

The TA-25 index of blue chip stocks gained 0.3% to finish at 1,224.59 points with the TA-100 adding 0.4% to 1,091.19. Turnover was unusually low, even for a Sunday, with less than NIS 590 million shares changing hands.

The consumer price index for January dropped 0.2%, more than economists had forecast, the Central Bureau of Statistics reported on Friday. That left the rise in inflation for the past year at just 1.5%, well below the midpoint of the government’s inflation target of 1% to 3% annually.

“The CPI figures strengthen the view of investors that the interest rate will not be going up anytime in the foreseeable future, and the odds of its being cut 25 basis points in the next few months have increased,” said Gil Hod, CEO of Price Investments & Risk Management.

The Central Bureau of Statistics reported Sunday that gross domestic product grew at its slowest in three years, expanding at a 2.5% annualized rate. Hod admitted that investors were “slightly concerned” about the slowdown in growth, but he noted: “Low interest rates encourage the flow of investor capital from bank deposits and government bonds to corporate bonds and shares, which will create a positive turned in the capital market in contrast to the performance of the economy.”

European shares nudged lower on Friday, held back by weak utilities and banks, although some strategists saw technical and other evidence of scope for renewed gains. The STOXX Europe 600 Utilities Index and the Banks index were both among the worst performing European sectors, nursing falls of 0.6% and 0.7%, respectively.

The S&P 500 dipped in a late decline on Friday as Walmart dropped following a report of a weak start to February sales, though the index just barely extended its streak of weekly gains to seven.

The Dow Jones industrial average was up less than 0.1% at 13,984.66 while the Nasdaq Composite Index posted a similarly slim gain to end at 3,200.17.

Analysts warned that U.S. stocks could struggle to extend their seven-week winning streak as the quarterly earnings period draws to a close and the market bumps into strong technical resistance.

Against the shekel, both the dollar and the euro strengthened on Friday. The greenback advanced 0.1% to a Bank of Israel rate of 3.684 while the euro added 0.05% to 4.9101.

Semiconductor-maker TowerJazz extended its rout on Thursday, when it dropped more than 6%, to end another 3.1% lower on Sunday. That made it the biggest loser among TA-100 shares on Sunday.

Last week, Tower forecast a drop of about a third in first-quarter revenue due to a contractual decline in sales to Micron at its Japanese plant, and as a consumer shift from PCs to tablets continues to affect part of its business.

Elbit Imaging, the real estate and biotechnology company controlled by Motti Zisser, rose 5.8%. Its 40%-owned Insightec unit got U.S Food and Drug Administration approval for Phase Three clinical trials of its ExAblate Neuro, a non-invasive, acoustic surgery platform for treating neurological disorders.

Babylon was unchanged at NIS 23 in heavy trading of NIS 23.9 million, a day before it is due to release its fourth-quarter 2012 results. Analysts at DS Investment House and Union Bank are expecting modest growth, relatively speaking, for the online translation company, with net profit up 6% from the third quarter. Union Bank cuts its price target to NIS 53 from 72, although that still represents a considerable upside for the stock.

Reuters and Oren Freund contributed to this report.

The Tel Aviv Stock Exchange.Credit: Bloomberg

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