Market Report

TA-25 Edges Up, Central Bank Acts to Boost Dollar

Government’s 10-year shekel bond drops 0.4%, raising yield to 3.62%

The Tel Aviv Stock Exchange took a breather and ended mixed in quiet trading yesterday, one day after the benchmark TA-25 index reached a record high. The Bank of Israel intervened in foreign currency trading three times in the course of the day, helping to lift the dollar 0.7% against the shekel.

Dealers estimated the central bank bought between $100 million and $200 million, giving the U.S. currency an extra boost. The dollar strengthened globally amid growing expectations that the Federal Reserve will begin pruning back its stimulus program.

The dollar’s Bank of Israel rate was set at NIS 3.5690, its strongest in two months, while the euro appreciated 0.2% to NIS 4.8063. In early-evening late trading, the dollar was at NIS 3.5523.

Currency trader FXCM said the market would be guided by economic data out of the United States and speculation about the Fed’s next stimulus moves, which should help drive the greenback higher against the shekel.

“A rise above the last peak of NIS 3.57 is likely to create a strong momentum for a move higher, with the first resistance point at NIS 3.60,” FXCM said.

On the TASE, the TA-25 index traded lower for most of the day before squeezing out a gain for the day of 0.04% to finish at 1,344.85 points. The broader TA-100 index also closed down 0.04%, at 1,212.90 points. Turnover was about average for recent weeks, at NIS 1.23 billion - about 30% of the average turnover in 2007-2010.

The day’s gains left the TA-25 index up 2.2% for the week and 13.4% for the year to date. The TA-100 index advanced 1.7% for the week, and is now up 15.6% for the year so far.

In the fixed-income market, prices were down sharply. The government’s 10-year shekel bond dropped 0.4%, raising the yield to 3.62%. Its inflation-linked bond for the same term declined 0.3% to raise its yield to 1.45%.

Africa Israel Investments’ Series Kaf Zion bonds dropped 32.5% and its Kaf Vav bonds fell 1.4% after bondholders rejected a request from Lev Leviev’s real estate holding company to redeem the bonds early. Africa Israel shares ended the day 7% lower.

An indication that the Fed may be ready to start scaling back its $85 billion in monthly bond purchases had weighed on equities Wednesday, driving the dollar to a more-than-four-month high against the Japanese yen early yesterday.

But sentiment began changing yesterday, lifting U.S. stocks, as the latest economic data suggested the Fed might not begin to slow its stimulus program soon, though conflicting views over the issue limited gains globally. Data on factory activity in November in the U.S. mid-Atlantic region indicated the economy continues to struggle to gain traction. The Philadelphia Federal Reserve Bank yesterday reported its business activity index fell to its lowest level since May.

The Dow Jones industrial average rose 0.4% to 15,959.77 points, the S&P 500 gained 0.4% to 1,788.61 points and the Nasdaq composite index added 0.7%, to 3,950.049 points.

European shares slipped yesterday. The pan-European FTSEurofirst 300 index, which hit a five-year high of 1,316.42 points earlier this month, dipped 0.1%, to 1,295.60 points. The euro zone’s blue-chip Euro STOXX 50 index also fell 0.1%, to 3,043.75 points, and the pan-European STOXX 600 index fell 0.2%, to 322.24 points.

In TASE trading, OPKO Health jumped 11.8%, biotech company Kamada advanced 4.5% and Ituran, whose technology is used to trace stolen vehicles, added 2.5%.

Evogene dropped 3% in heavy trading of NIS 61.7 million after it priced a secondary share offering in the U.S. at $14.75. The plant genomics firm, which focuses on enhancing crop performance and productivity, raised $73.75 million in the share sale. 

Other big losers in yesterday’s trading were Bezeq Communications, which dropped 4.2% on turnover of NIS 83.1 million, the online translation company Babylon, which shed another 3.8% and Nochi Dankner’s Discount Investment Corporation.

With reporting from Reuters.

Bloomberg