Market Report / Dror Reich

Tel Aviv Joins Global Sell-off Spurred by Fed Worries

Prices were also weighed down by fears over Europe, where the cost of insuring Ukraine's debt against default jumped.

Tel Aviv joined a worldwide drop in share prices on Tuesday, prompted by fears that the Federal Reserve will scale back its stimulus as the United States economy recovers.

The TA-25 index of blue chips marked its second day lower, retreating 0.6% to close at 1,364.73 points on turnover of NIS 1.31 billion. The broader TA-100 also fell 0.6% to end at 1,222.48. Communications, insurance and technology shares paced the decline.

Investors expect the Fed to start paring its $85 billion-a-month program, if Friday’s U.S. jobs report for November shows encouraging growth. Many think a cut-back could come in March, though some expect it by January, after U.S. data on Monday pointed to steadying growth.

In late morning trading, New York time, the Dow Jones industrial average was down 0.6% at 15,907.88. The Standard & Poor’s 500 Index lost 0.4% at 1,793.38 and the Nasdaq Composite Index 0.2% at 4,036.83.

European shares were rattled for a second day, with Paris’s CAC 40 sinking 2% and the pan-regional FTSEurofirst down 1.4% percent in its weakest day since August. Trading at its lowest level in nearly three weeks, in a broad-based sell-off. 

On top of concerns about what the Fed will do next, new fears over Europe surfaced, as the cost of insuring Ukraine’s government debt against default jumped, leaving it a whisker from 2009 peak levels.

Amit Rosenzweig, senior investments manager at Halman-Aldubi, said the next big test for the markets would be Friday’s release of U.S. employment data, but that expectations are that the data will be positive and solidify the Fed’s scaling back of its stimulus program.

“Investors are exploiting this year’s sharp run-up [in share prices] to take profits, while the local market is still trading above 1,300 points,” he said.

In foreign currency trading on Tuesday, the dollar slipped 0.2% to a Bank of Israel rate of NIS 3.5230, while the euro edged 0.07% higher to NIS 4.7818.

Israel Discount Bank tumbled 3.4% to NIS 6.86 on turnover of NIS 109 million, making it the day’s volume leader, on news overnight that the lender’s controlling shareholders were divesting their stake. Matthew Bronfman and Reuven Schron are selling the first bloc of shares at NIS 6.679 each, Discount said, less than the Tel Aviv Stock Exchange market price.

Hadera Paper Mills tumbled 4.6% over the company’s plans to lay off 200 workers, despite an agreement between the company and its union to suspend the strike at its main plant.

Leading technology stocks lower were online translation company Babylon, which extended its losses by another 3.9%, and LivePerson, a maker of platforms that delivers real-time chat solutions to corporate websites, dropped 3.8%.

Oil Refineries Limited, which fell 0.1% on Tuesday after rallying 7% the day before, published a prospectus late on Monday for a NIS 529 million rights offering. The new shares will equal about 24% of the company’s total shares outstanding.

Among the top gainers in Tuesday’s session, discount supermarket chain Rami Levy led TA-100 stocks higher on a 2.8% advance. The plant genomics company Evogene added 1.3% as did defense contractor Elbit Systems. Yitzhak Tshuva’s holding company Delek Group rose 1.2%.

Dan Keinan