The Tel Aviv Stock Exchange ended marginally higher Monday overcoming concerns about the budget battles in the United States, a downturn in European markets, and a profit warning from Bank Leumi back at home.
The TA-25 benchmark index of blue chip stocks ended up less than 0.2% to 1,217.96 points at the closing, while the broader TA-100 rose 0.1% to 1,087.37. Turnover was NIS 957 million.
U.S. President Barack Obama and Congress remain deadlocked over how to resolve the latest fiscal crisis, although there were signs a compromise was being worked on. Republican leaders on Sunday promised moves to avoid a government shutdown on March 27, when funding runs out for most federal programs, while President Obama raised anew the issue of cutting entitlements, which has been a key stumbling block.
Budget fights in Congress took their most serious turn in years on Friday when $85 billion in indiscriminate spending cuts known as “sequestration” began to kick in after both parties failed to agree on how to stop them.
Meanwhile, a political stalemate in Italy and China’s plans for tighter controls on its property sector added to concern about slower global growth, pushing world shares lower. The euro also weakened, with the poor growth outlook increasing expectation that the European Central Bank could cut interest rates to boost the region’s economy.
In Europe, Britain’s FTSE 100 declined 0.5% to 6,345.36, while Germany’s DAX fell 0.3% to 7,684.15, and France’s CAC-40 edged up almost 0.1% to 3,702.95.
Wall Street opened lower, too, with the Dow slipping 0.3% to 14,045.58.
In the foreign currency market, the dollar extended its gains on Monday while the euro weakened. The U.S. currency added 0.3% to a Bank of Israel rate of NIS 3.733, while the euro lost 0.26% to NIS 4.8567.
“At this stage we believe the potential for a shekel depreciation is limited because of the supply [of foreign currency] at the start of the calendar month. The dollar isn’t expected to strengthen beyond NIS 3.8,” said Yossi Fraiman of Prico Risk Management.
Bank Leumi ended down 1.9% on turnover of NIS 118.5 million, the biggest of the session. The bank said it would make a NIS 340 million provision for the fourth quarter of 2012 to cover expenses connected to an investigation by the U.S. Internal Revenue Service into allegations it actively helped American clients evade U.S. taxes. Combined with an additional provision for an early-retirement program for bank employees, Leumi will report a loss of about NIS 100 million for the quarter and a possible 42% drop in net profits for the year.
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