The past year was a good one for investors in Tel Aviv. The blue chip TA-25 index rose 9.2% during 2012, while the TA Banks-5 index climbed 23% and both government bonds and large-cap corporate bonds rose 8%. The worst-performing index was the TA Communications index, which lost a third of its value.
But shares on the Tel Aviv Stock Exchange closed down slightly yesterday, ending the year on a somewhat sour note, over fears that the United States is headed over the "fiscal cliff" combined with underperforming local economic data.
Most foreign markets will be closed today for New Year's, and several major markets were closed or had shortened trading hours yesterday.
The benchmark TA-25 index lost 0.1% to close at 1,185.60 points, and the broader TA-100 index fell 0.2% to 1,049.06 points. The TASE spent most of the day in the red before clawing back nearly to starting levels.
Two indexes bucked the downward trend. The Oil & Gas index rose 0.4% and the TA-Technology index gained 0.5%, but all other major sector indexes were in the red. The Banks-5 index dropped 1.3% and the Real Estate-15 index fell 0.8%.
Turnover was about average for recent weeks at NIS 958 million. While corporate bonds were mostly unchanged government bonds continued to climb, despite the growing national budget deficit.
Ten-year shekel-denominated government bonds not indexed for inflation rose 0.1%; yields hit a new low of 3.61%. Similar inflation-linked bonds also rose 0.1% and their yields are now at 1.22%, also a record low.
Israel Chemicals dropped 2.8% in the last hour of trading on volume of NIS 38.7 million. Potash Corporation the Canadian firm that wants to buy control of ICL, announced it had signed a deal to sell potash to China at $400 a ton, well below previous estimates of a $470 per ton price for the deal.
Ratio Oil Exploration rose 1.2% on the day's second-biggest turnover, NIS 62 million. The share price rose during the day by 5% before retreating, but still pulled up the index of energy stocks after the company raised funds at above the market price for the share.
Defense electronics firm Elbit Systems announced it had won Defense Ministry contracts worth a combined $315 million, sending the share up 3.2%, for the biggest rise among TA-25 index shares.
The company will supply battle management systems and avionics for helicopters, virtual training for the Israel Air Force's fighter aircraft and operation and maintenance services for the IAF's flight academy. It will also provide Hermes 900 unmanned aircraft systems and electronic warfare systems for F-15 and F-16 fighter aircraft and for the navy's missile vessels.
Avgol Industries, the maker of non-woven fabrics, extended its gains for a seoncd day, rising 5.7% after a 6.2% advance the day before. The company said last week it was buying out most of its Chinese partner's stake in a joint venture.
Dollar rises slightly
The dollar rose slightly against the shekel yesterday, up 0.1% to a representative rate of NIS 3.733. The euro also gained against the local currency, up 0.05% and the representative rate was fixed at NIS 4.901. No official rates will be set today by the Bank of Israel.
In global forex markets the euro was unchanged yesterday at $1.3210 but was up 2% for the year. An agreement on the U.S. budget would also be viewed as positive for the euro because it would help boost global growth, while deadlock is seen as dollar-positive. "However the medium-term impact" of no U.S. budget deal is dollar-negative, said Camilla Sutton, chief FX strategist at Scotia Capital in Toronto.
"The combination of aggressive Fed policy, the lack of a credible fiscal plan, a challenged political system and the impact of the fiscal drag should weigh on the dollar," she said.
After a subdued day in Asia, where Japan's Nikkei as well as a number of other indexes had already shut for the year, limited year-end European trading left the MSCI all-world index on track to end the year up nearly 13%. The pan-European FTSEurofirst 300 has also gained roughly 13% this year, largely due to the European Central Bank's vow to tackle the region's debt crisis.
Reuters contributed to this report.