Market Report / Missile Test Gives Stock Market a Brief Scare

The TA-25 closed out the Jewish year at 1,179.83 points and just 4% up for the Hebrew calendar year. The broader TA-100 index closed 5773 at 1,082.06 points.

The Tel Aviv Stock Exchange rang out the old year of 5773 on a sour chime Tuesday, with the holiday mood shaken by a false alarm about Syria prompted by an Israeli missile test.

The TA-25 index dipped as low as 1,172.76 points at noon on reports that Russia had detected two ballistic "objects" launched toward the eastern Mediterranean, prompting fears that the expected U.S. operation against Syria had commenced. The Defense Ministry later confirmed, after some initial confusion, that Israel and the United States had carried out a missile test in the Mediterranean Sea.

The confirmation helped the benchmark index to rebound, but not enough to carry it out of minus territory. The TA-25 ended the day down nearly 0.9%, closing out the Jewish year at 1,179.83 points and just 4% up for the Hebrew calendar year. The broader TA-100 index lost 0.8% Tuesday, the last day of the Rosh Hashanah-shortened week, to end the day and 5773 at 1,082.06 points.

Turnover was a strong NIS 1.21 billion.

Globally, stocks rose Tuesday, as U.S. President Barack Obama's plan to seek congressional authorization for military action against Syria was expected to delay any strike for at least several days, while the dollar hit its highest in over a month against the euro and yen.

The Dow Jones industrial average was up 0.7%, at 14,906.90 in late morning New York time. The Standard & Poor's 500 Index was ahead almost 1%, at 1,648.94 and the Nasdaq Composite Index up 1.2% at 3,632.69. MSCI's world equity index, which tracks shares in 45 countries, was up 0.6. European stocks were little changed.

In foreign currency trading Tuesday, the dollar and to a lesser extent the euro both gained on the shekel. The U.S currency rose 0.4%, to NIS 3.6320 while the euro edged up 0.02% to NIS 4.7814. On Monday the Bank of Israel purchased around $200 million in order to keep the dollar from weakening further against the shekel.

"The Bank of Israel prefers not to wait for the possible attack on Syria, which is expected to strengthen the dollar against the shekel and decided to intervene for the first time since June in order to stop the continuing strengthening of the local currency," said currency trader Atrade.

Nevertheless, Atrade said the greenback's turnaround on Monday was more due to a global strengthening of the dollar than to the central bank's action. "Breaking through the NIS 3.65 level will bring the exchange rate to NIS 3.71," it forecast.

Banking, real estate and energy shares all led the market low. The Banks-5 index closed down 1.5%, led by a 1.8% drop for Mizrahi Tefahot Bank and declines of 1.5% for Bank Hapoalim and Israel Discount Bank.

In property, where the TA-Real Estate 15 index plunged 2.1%, the leading stocks weighing it down were Lev Leviev's Africa Israel, with a 3.4% decline, and Gazit Globe, which fell 3.3%. Oil stocks were led by a 3.1% drop in Jerusalem Oil Exploration.

Nova Measuring Instruments added 2% after it reported Tuesday a $10 million order from an unnamed semiconductor foundry.

Property & Building, the real estate development arm of Nochi Dankner's IDB group, raised NIS 437 million selling additional bonds from its Vav and Zion series. The five-year, inflation-indexed Vav bonds sold a low rate of 3.76% while the unlinked Zion bonds sold for 6%. Property & Building shares fell 0.2%.

With reporting from Reuters.

Bloomberg