Market Report / Hurricane Sandy Hits Tel Aviv, Too

Banks drop 2%, TA-25 falls 0.8% on very light trading.

Stocks fell on the Tel Aviv Stock Exchange Monday on very thin trading. The biggest news, and the most interesting for traders, was the shutdown of all U.S. stock and options markets in anticipation of Hurricane Sandy, the first such weather-related shutdown in 27 years. Markets in the United States are expected to remain closed today.

Local investors, meanwhile, were also waiting for the Bank of Israel decision on November interest rates. After the TASE closed Monday the governor of the central bank, Stanley Fischer surprised many analysts by announcing a 0.25% cut in interest rates, to 2%. What had traders worried was the possibility that the bank would at the same time announce additional steps to limit mortgages in order to rein in Israel's red-hot real estate market, which Fischer did. (See story on Page 12.)

The TASE opened down and stayed there until closing. The blue chip TA-25 index fell 0.73% yesterday to close at 1,199.61 points, while the broader TA-100 index lost 0.8%, closing at 1,063.49 points. All major indexes were in the red for the day. The Banks-5 index dropped 2% and the Real Estate-15 index lost 0.9%. The Oil and Gas Exploration index fell 0.&% and the BlueTech-50 index lost 0.8%. The Biomed index fell 0.8%.

Turnover was quite low Monday, at NIS 627 million. Volume has risen significantly in recent weeks, the past few days excluded, after recovering from extremely low levels over the summer. The closure of the U.S. markets was certainly a major factor in Monday's thin trading; it remains to be seen whether turnover will rebound again.

Large-cap corporate bonds, as reflected by the TelBond-20 index, fell by up to 0.1%.

In the eye of the storm

World shares and commodities fell as a recent run of downbeat corporate reports cast a shadow over the economic growth outlook and markets awaited the impact of what is expected to be a huge hurricane in the United States. U.S. stock index futures, which traded as usual, were down around 0.3% to 0.6%. That was in line with the falls seen across major European markets as renewed uncertainty over Spain and Greece put the euro and peripheral bond markets under pressure. The broader MSCI world equity index lost 0.25% - on track for its worst monthly performance since May as doubts grow over the effect of the latest round of central bank efforts to boost activity.

Reuters contributed to this report.