Tel Aviv Stocks' Worst Day Since 2011: Large-caps Sink 5%, Teva Sinks 8%

Large-cap and tech tumble in Tel Aviv was inevitable after Wall Street's fall Friday after comments that a U.S.-China trade deal is not in the bag

Peter Navarro, director of the National Trade Council, speaks during a Bloomberg Television interview outside the White House in Washington, D.C., U.S., on Wednesday, March 28, 2018
Andrew Harrer/Bloomberg

Tel Aviv shares lost roughly 4% to 5% on Sunday, with bonds finishing the trading session at a loss of about 1.2%. For the year, large-caps sank to their lowest point since April 2018, but the intraday decline was the steepest since August 7, 2011, when fears of a debt crisis in Europe sent  large-caps sliding 7%. 

Israeli shares finished the week's first trading session deep in the red following Wall Street's retreat last week. At closing, large-caps listed on the TA-35 index, of the 35 companies with the biggest market cap on the Tel Aviv Stock Exchange, had tumbled 5.1% to 1,449 points. The TA-125, the index of the most highly capitalized companies on the TASE, which was off by 4.7% to 1315 points. The AT-Industrials lost 4.5% to 1,225 points.

The TA-Small Enterprises 60 index (the SME60) Index, of the 60 heaviest companies not listed in the large-cap indices, dropped 3.8% to 531.7 points.

Bonds also took a beating Sunday, albeit less than shares, as befits their relatively safe-haven nature. The Tel-Bond 20 and 60 indices both lost 1.2%.

In Tel Aviv, among the hardest-hit companies this Sunday was the drugs company Perrigo, which fell by nearly 29% because Ireland has hit the company with a big tax bill, Guy Rosel of Migdal Capital Markets told Haaretz.  Teva fell 8% on heavy turnover.

Last week closed with sharp drops on Wall Street after a volatile session, which infected the world capital markets. The S&P-500 index of global largecaps sank more than 2% to 2,417 points and the Dow Jones industrials fell 1.8% to 22,445.37, while tech stocks on Nasdaq retreated by nearly 3%, to 6,332.99 points. Concerns of slowing U.S. and global economic growth led to a rout in technology and communication shares.

It bears noting that dozens of Israeli companies are dual-listed in Tel Aviv and on Wall Street, mainly Nasdaq. As there is no trade Friday in Israel, but rehre is on Wall Street – wide gaps opened between closing Thursday share prices in Tel Aviv and their closing on Wall Street on Friday. It was inevitable that Israeli shares would begin Sunday in the red thanks to the arbitrage gaps, and absent encouraging news for investors, they ended in the red as well.

The immediate impetus for the late acceleration in losses on the Street on Friday was the remark by White House trade adviser Peter Navarro, saying Washington and Beijing might not reach any trade deal at all over the next three months, unless Beijing can agree to a profound overhaul of its economic policies, Reuters reported. Nasdaq is down over 20% from its highest point in 2018.

Also Friday, Wall Street guru Jim Cramer warned on Friday that it's a "treacherous bear market." No, he isn't predicting a crash Monday, but it isn't good. As Cramer says, "I can recall only once having a week like this and walking out feeling like something worse looms: the week before the Crash in 1987."