TASE Ends Lower on Paper-thin Turnover

Investors may have applauded the decision to abandon 2-year budgets, but the Street impacted more.

The good news on the fiscal front at home failed to overcome downturns on Wall Street and in Europe, as well as disappointing economic developments in the United States, which left the Tel Aviv Stock Exchange lower on Sunday in unusually thin trading.

The TA-25 index of blue chip stocks edged down 0.3%, to end at 1,225.74 points. The broader TA-100 was also down 0.3% to 1,090.65, with mid-cap stocks leading shares lower. The TASE's TA-Midcap 50 finished down more than 1% at 463.1 points. Turnover was a mere NIS 349 million.

On the positive side, the market was cheered by Finance Minister Yair Lapid's decision to abandon the 2-year budget that had been widely blamed for creating the overspending problem in 2012 in favor of a return to a one-year budget starting in 2015.

He also won kudos for naming Yael Andorn the new Finance Ministry director general, which investors said provided more certainty that the new finance minister is committed to a stable fiscal policy.

On the negative side, major world stock markets tumbled and the dollar fell on Friday, after the U.S. Labor Department said that employers hired at the slowest pace in nine months in March, adding just 88,000 nonfarm jobs. The weaker-than-expected jobs report added to fears the U.S. economic recovery may be losing steam.

The Dow Jones industrial average dropped 0.3%, to close at 14,565.25. The Standard & Poor's 500 Index dropped 0.4% to end at 1,553.28 and the Nasdaq Composite Index dropped 0.7% to 3,203.86. In Europe, FTSE EuroFirst 300 tumbled 1.5% - the biggest daily fall of the year – to close at 1,162.21 points.

The dollar fell 0.2% against a basket of major currencies to 82.497, on expectations the Federal Reserve will continue its bond-buying program, known as quantitative easing. The euro rose 0.6% to $1.3004. Against the shekel, the greenback lost 0.1% to a Bank of Israel rate of 3.6270 on Friday. The euro gained nearly 0.8% to NIS 3.7643.

Despite the recent declines, Bank Leumi said in its weekly commentary that the outlook for the TASE remains positive. "Domestically, trading is expected to be influenced by the economic policies presented by the new government, most particular the budget cuts that have been paid at its doorstep," the bank said. "We assume that second-tier shares will outperform because of their more attractive pricing."

Bloomberg