Market Report

TA-25 Falls for a Third Day as Stimulus Uncertainty Plagues World Markets

Israel Chemicals tumbles 3% after reporting a sharp drop in quarterly earnings; telecom stocks buck the trend.

The Tel Aviv Stock Exchange’s benchmark TA-25 index ended lower for the third day in a row, led by declines in energy and biotechnology shares as markets in Europe and the United States sagged amid uncertainty about stimulus packages.

After struggling to rise most of the day, the index gave up the ghost after 2 P.M. and ended down 0.1% at 1,307.31 points. The broader TA-100 fell 0.3% to 1,185.48. Turnover was a very low NIS 951.6 million.

The TA-Biomed index ended down 1.9% at 1,009.74, led by drops of 3.5% each by Compugen and Kamada. The TA-Oil and Gas index finished 1.1% lower at 1,274.08, with Ratio down 2.5% on turnover of NIS 41.1 million, Delek Drilling off 1.2% and Isramco down 1%.

Despite Wednesday’s low volume, Eli Kadosh, chairman of the investment committee at Price Risk Management & Investments, said the TASE was showing increased liquidity, with average daily volume rising to NIS 1.4 billion in recent months.

“In the coming period we expect money to move in the Tel Aviv bourse, a process we believe has already begun and will manifest itself in higher volumes in shares and warrants,” Kadosh said in Prico’s monthly market survey. He called insurance and banking the most attractive sectors.

European stocks dropped Wednesday, with a broad benchmark hitting a three-week low as uncertainty over the outlook for equity-friendly monetary stimulus from central banks prompted investors to book recent hefty profits.

In late afternoon London time, the FTSEurofirst 300 index of top European shares was down 0.5% at 1,284.13 points, after hitting a three-week low earlier in the session.

Wall Street followed overseas markets lower, with concerns the U.S. Federal Reserve could start to scale back its stimulus efforts damping investors’ appetite for risky assets. In late morning New York time, the Dow Jones industrial average was down 0.3% at 15,700.84 and the Standard & Poor’s 500 Index was off 0.1% at 1,766.60, but the Nasdaq Composite Index was fractionally higher at 3,920.64.

In foreign currency trading, the euro stemmed its losses to gain 0.1% on the shekel to a Bank of Israel rate of NIS 4.37399. The dollar continued to lose, albeit moderately, weakening less than 0.09% to NIS 3.5310.

In the fixed-income market, the Tel Bond 20, 40 and 60 indexes rose as much as 0.19%. The government’s 10-year shekel bond rose 0.33% while its inflation-indexed Galil bond for the same term advanced 0.3%.

In TASE equities trading, Israel Chemicals tumbled 3% after reporting a sharp drop in quarterly earnings, while El Al Airlines fell 3.5% despite strong earnings for the quarter. Online translation company Babylon tumbled 4% amid reports it would lay off a third of its staff after losing its revenue-sharing contract with Google.

Running against the trend, telecommunications shares ended sharply higher, with the TA-Communications index climbing 2.4% to 782.11.

Cellcom Israel rose for the second straight day despite announcing Tuesday that its third-quarter net profit dropped sharply. The stock’s 4.6% rise made it the biggest gainer on the TA-100. Partner Communications rose 2.5% and Bezeq gained 1.9% on turnover of NIS 80.9 million, the most active stock of the day.

Ituran finished 2.1% higher after the vehicle-location service said net profit climbed to $7 million in the third quarter from $5.2 million a year ago. The company approved a cash dividend of 60 agorot a share.

With reporting by Reuters

Bloomberg