Market Report / TASE Marks Fourth-day of Gains, Dollar Strengthens Against Shekel

Despite recent gains, the Tel Aviv Stock Exchange is still underperforming compared to other global financial centers and is thought to have room to rise.

The Tel Aviv Stock Exchange finished higher again on Monday to cap a 3% rally over the past four trading days as it shadowed Wall Street's climb to record-breaking heights.

The blue chip TA-25 Index gained 0.5% to end at 1,230.16 points on turnover of NIS 1.17 billion. The TA-100 rose 0.7% to close at 1,105.37 while the TA-MidCap 50 advanced 1% to 530.24. Despite a string of gains recently, the TASE is still underperforming compared to other global financial centers, remaining well below its all-time peak of 1,350 points.

"This week's trading is moving along with handsome gains against a background of optimism in markets abroad," said Hezi Yanushavsky, head of research at ATrade. "The positive trend will likely accompany us in upcoming days and investors will again try to take advantage of this We believe the rally will continue until the next resistance level of 1,240."

Real estate shares were day's top performers, with the TA-Real Estate 15 surging 1.7% to 351.43. The TA-Banks Index also outperformed the broader market, gaining 1% to end at 1,169.61. Alrov Properties & Lodgings and Al-Rov Israel were the top gainers among TA-100 stocks at 7.6% and 5.5%, respectively. Israel Discount Bank led the most actives, with NIS 75.9 million shares changing hands on a 0.7% rise.

The bond market also advanced, with the Tel-Bond 20 Index rising 0.4% to reach another all-time high. Government bonds, meanwhile, were mixed. Shekel bonds, with 10-year maturities, fell 0.1% to trade at a 3.5% yield, while 10-year inflation-linked bonds soared 0.46%, reducing their yield to 1.32%. Demand for inflation-linked securities has been driven up in recent days by expectations for accelerating consumer prices as a consequence of the 2013-2014 budget.

Global equity markets rose Monday as investors sought better returns in stocks, while uncertainty over the Federal Reserve's stimulus program caused gold to pause in the midst its longest losing streak in four years.

Despite major U.S. and European stock indices being up double digits – the American benchmark S&P 500 Index is almost 17 percent higher so far this year – investors still see better returns ahead in equities than elsewhere.

The pan-European FTSEurofirst 300 closed 0.3% higher at 1,251.53 on a quiet day of trade, with Swiss, Austrian, Danish and Norwegian stock markets shut for a holiday. The German blue-chip DAX Index outperformed, rising 0.6% after it bounced off strong support at 8,400. Late in the morning New York time, the Standard & Poor's 500 Index was up 0.15% at 1,670.05, and the Nasdaq Composite Index was up 0.19% at 3,505.58.

In foreign currency trading, the dollar posted a smart 0.44% advance on the shekel to a Bank of Israel rate of NIS 3.5500. The euro strengthened 0.5% to NIS 4.7084.

"The narrowing of the interest rate differential locally [with global rates] and the strengthening of the dollar against major world currencies has supported a dollar recovery locally," said Yossi Fraiman of Prico Risk Management & Investments. "The shekel's losses aren't over and the dollar is likely to strengthen to NIS 3.68 and even higher."

On the TASE, shares of Oil Refineries Ltd. (Bazan) climbed 4.2% after the company said a $517 million hydrocracking plant that went into operation in January helped boost cash flow to a $221 million in the first quarter, compared with a $116 million deficit a year earlier. Oil Refineries bonds rose 2.5% and cut their yields to 4% to 6%. Bonds of parent Israel Petrochemical Enterprises rose by 3.2% to trade at yields between 10% and 13%.

Apparel maker Tefron fell 1.2% by close. An improvement in its first quarter earnings – before interest, taxes, depreciation and amortization, they rose 7.8% to $1.6 million from a year ago – was undercut by the surprise news that CEO Amit Meridor was stepping down after three-and-a-half years.

With reporting from Reuters.

Bloomberg