Market Report / Worries About U.S. and China Drive Stocks, Bonds Lower

Insurance stocks lead the pack down, offsetting confidence in Jacob Frenkel's appointment.

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Share and bond prices fell sharply on the Tel Aviv Stock Exchange on Monday amid concerns about Chinese economic growth and the U.S. Federal Reserve's plans to taper down its stimulus program. Insurance stocks led the way down.

The benchmark TA-25 index sank below 1,200 points, shedding 1% to close at 1,198.90. The TA-100 finished 1.4% down at 1,071.52, as some NIS 1.25 billion in shares changed hands. The declines enveloped nearly the entire market, but insurance stocks were especially hard hit: Phoenix lost 7.1%, Clal Insurance 5.9% and Menorah 5.6%. The TA-Insurance index was down 4.5% to close at 1,333.87.

Analysts lauded the appointment of Jacob Frenkel as the next Bank of Israel governor, but the joy was more than offset as global equity markets, bond prices and commodities tumbled on Monday, entering another week of heavy selloff. Worries about the U.S. central bank's plans to scale back its money printing, combined with tighter financial conditions in China, spurred the slide.

Prices of U.S. Treasuries also resumed their slide and benchmark yields climbed to a nearly two-year high. Wall Street opened sharply lower, with the Dow Jones industrial average retreating more than 200 points in early trading, joining a global selloff after concerns about liquidity crunch in China sent Shanghai stocks down more than 5%.

In late morning New York time, the Standard & Poor's 500 Index was down 1.5% at 1,568.65 and the Nasdaq Composite Index 1.4% at 3,311.79. Yields on 10-year Treasury notes spiked to two-year highs of 2.6%. The pan-European FTSEurofirst 300 index provisionally closed down 1.5% at 1,115.39 points, its worst finish since November 29 last year. It is now down 1.6% year to date.
In the local bond market, the Tel-Bond 20,40 and 60 indices fell as much as 0.7%, with Kardan NV Series Aleph bonds falling 3.5% to yields of 55 and Makhteshim Agan Series Bets off 1.9% to a yield of 5.42%.

In government bond trading, traders waited news from the Bank of Israel about the July base lending rate (which was left unchanged at 1.35% in an announcement after the TASE closed). The government's 10-year shekel bond declined 0.4% to a yield of 3.93%. Its inflation-indexed bond for the same term was down 0.78% to yield 1.77%.

The dollar gained 0.17% in foreign currency trading to a Bank of Israel rate of NIS 3.634 while the euro lost 0.64% to NIS 4.7623.

Among the biggest losers in Monday's trading was Nochi Danker's Discount Investment Corporation, which plunged 7.7%. The Swiss bank Credit Suisse, in which it holds a significant stake via its Koor unit, dropped 5% over the weekend.
Israel Chemicals continued to lose altitude, dropping 1% on Monday on a turnover of NIS 87.5 million, making it the most heavily traded share of the day. Teva Pharmaceuticals dropped 0.9% on turnover of NIS 61.9 million, failing to get a rise from an announcement on Monday that it had launched a generic version of Viagra in Germany, Britain, Italy, the Netherlands, Switzerland, Ireland, Austria, Belgium and Denmark. The company has already launched the product in Spain, Canada and other countries.

Bezeq, however, bucked Monday's trend, adding 2.2% on heavy turnover of NIS 48.8 million. Pluristem added to Sunday's 4.8% rise to finish 3.2% higher. The developer of placenta-based cell therapies said last Thursday that preclinical results in the treatment of bone marrow disease showed that its Placental eXpanded RAD cells may serve as a highly effective "off the shelf" therapy to mitigate acute radiation syndrome.

Reuters contributed to this report.

A stock investor in China. Global stock markets reeled Monday, with Shanghai's index enduring its biggest loss in four years.Credit: AP

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