Market Report: U.S. Crisis Over, Shares Drop on Fears of Aftereffects

Major Tel Aviv Stock Exchange indices edge down, but TA-Biomed up 5% over week

The 11th-hour conclusion to the United States budget crisis did little cheer the Tel Aviv Stock Exchange or other global markets Thursday as investors focused on the effect of the 16-day government shutdown on the economy and prospects of a re-run early next year.

The TASE's benchmark TA-15 index ended the day down 0.8% at 1,296.65 points, bringing it back down below the 1,300 mark it surpassed for the first time in more than two years earlier in the week. The broader TA-100 was off 0.4% at 1,171.56. Turnover was NIS 1.22 billion.

Thursday’s decline left the TA-25 just 0.3% higher for the week and brought its year-to-date gain to 9.4%. The TA-100 gained 0.4% for the week and has now risen 11.7% so far for 2013.

The week's standout performer, however, was the TA-Biomed index, which rose 5%, including 2.4% Thursday to end at 1,091.89. The index was led higher Thursday by Compugen's 8.7% rise and gains of 4.3% by Pluristem and Evogene.

OPKO Healthcare, the U.S. company that joined the TASE earlier this month and has since risen some 40%, pulled back slightly Thursday, edging down 0.2%.

U.S. President Barack Obama Wednesday night signed legislation to fund the government until January 15 and extend a debt ceiling deadline to February 7, pulling the world's biggest economy back from the brink of a historic default. But the move did little, however, to resolve the underlying disputes that led to the crisis in the first place.

"Investors are now resuming their focus on the earnings season ahead and macro-economic data," said Amit Rosenzweig, senior investments manager at Halman-Aldubi. "The reason for [Thursday's] declines was profit-taking on the back of a strong performance in the local market where the index breached the psychological barrier of 1,300."

On Wall Street, the Dow Jones industrial average was down 0.3%, at 15,323.19 in early afternoon New York time. The Standard & Poor's 500 Index was up 0.4% at 1,727.88 and the Nasdaq Composite Index up 4% at 3,855.27. The FTSEurofirst 300 index of top European shares closed up 0.2% at 1,268.09.

The bearish mood hit the dollar as well, with the dollar index was down 1% at 79.700, well off a one-month high of 80.754 on Wednesday. Against the shekel, the greenback registered a sharp 0.54% drop to a Bank of Israel rate of NIS 3.5350. The euro strengthened just over 0.2% to NIS 4.8230.

"The political cloud will continue to hover over the dollar in the coming months and weigh down on the currency," said currency trader FXCM, noting the greenback recovered only modestly on the news of the vote on the debt ceiling.

In TASE equities trading, financially troubled Oil Refineries Limited jumped 11.6% by close in heavy trading of NIS 63.4 million. Israel's biggest refiner announced it was raising NIS 150 million through a rights offering as it struggles to meet repayment on $1.7 billion in debt.

Israel Chemicals, which has enjoyed a strong rally since the start of September, tumbled 2.7%, the biggest decline among TA-100 stocks for the day, as NIS 64.5 million in shares changed hands. The Israel Corporation, which owns about a third of the refineries and a controlling stake in ICL, ended down 1.3%.

Ofer Nimrodi Israel Land Development Corporation finished 1.5% up Thursday after it floated a 16.6% stake in its Polish unit, MLP Group S.A, for trading on the Warsaw Stock Exchange. The initial public offering raised the equivalent of NIS 84 million.

Bank shares were among the biggest losers Thursday, with the TA-Banking index leading the sectorial indices down on a 1/3% decline to 1,240.62. Banks Hapoalim, Leumi and Mizrahi-Tefahot were all down about 1.4% and Israel Discount Bank off by 1.1%.

Other big losers Thursday included Partner Communications, off 2.7%, Allot Communications down 2.6% and Elbit Systems down 2%.

Reuters contributed to this report.

AP