Stocks Post Gains on Hopes Fed Will Keep to Its Stimulus Program

Tepid trading day in Tel Aviv Stock exchange.

Eran Azran
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Eran Azran

Tel Aviv shares ended moderately higher on Tuesday in tepid trading, with the TA-25 keeping to a narrow trading band amid expectations that the U.S. Federal Reserve would extend its stimulus program. Energy shares rallied.

The TA-25 index of blue chip stocks rose 0.3% by close to 1,308.27 points, while the broader TA-100 added 0.4% to 1,182.46 on turnover of just under NIS 1 billion.

The dollar slid to a two-year low against the euro and global equity markets rose for a fifth session in a row on Tuesday, after weak U.S. jobs data reinforced expectations the Fed will keep its easy-money policy intact into 2014.

Nonfarm payrolls increased 148,000 in September, substantially lower than economists' estimates of 180,000 new jobs.

MSCI's all-country stock index, which tracks stocks in 45 countries, rose 0.6% to levels last seen in January 2008. The FTSEurofirst 300 of leading European shares rose 0.5% to close at a provisional 1,287.32.On Wall Street, the Dow Jones industrial average was 0.4% higher at 15,453.30.

The euro hit a high of $1.3748 against the dollar, its strongest level since November 14, 2011, in early New York trading. Against the shekel, the dollar slipped 0.2%, leaving its Bank of Israel rate at NIS 3.5280. The euro lost 0.24% of its value to NIS 4.8242.

"At the moment, the markets expect the quantitative easing [stimulus] program to remain in its current form of about $85 billion a month at least until March," said currency trader FXCM. "We're hearing in the market that under its incoming chairwoman, Janet Yellen, that the purchases of bonds will increase. That, of course, is bad for the dollar, whose value is diminished by quantitative easing."

In the bond market, the government's 10-year shekel bond rose 0.38%, reducing its yield to 3.56%. The inflation-indexed Galil bond for the same term rose 0.33%, trimming its yield to 1.5%.

Apart from energy shares, Space Communications was at the center of the market's attention on Tuesday as its shares plunged 14.8% on unusually active trading of NIS 3.5 million. The company on Tuesday reported a malfunctioning power supply to the engines running its Amos 5 satellite, which it said will shave 11 or more years from its working life. SpaceComm's Series 12 bonds plunged 6.34% raising their yields to 5.2%.

Among the top gainers in Tuesday's trading, biotech company Evogene gained 5% and Oil Refineries added 3.6%

Mivtah Shamir rose 0.8% and Israel Discount Bank 1.2% after they announced plans Tuesday to form a NIS 500 million fund to invest in U.S. real estate. Enlight, the alternative-energy provider, closed up 2% after it moved a step closer to joining a partnership to develop a NIS 450 million wind-energy farm on the Golan Heights.

Reuters contributed to this report.

Credit: Reuters