TA-25 falls as banks skid after rate cut

Israeli stocks closed broadly lower Tuesday, a day after the Bank of Israel said it would cut the benchmark interest rate a quarter of a percentage point to 5.25% and said it saw room for further cuts.

October 25, 2006 08:42


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MarketWatch: In-depth global business coverage SHARES TEL AVIV Israeli stocks closed broadly lower Tuesday, a day after the Bank of Israel said it would cut the benchmark interest rate a quarter of a percentage point to 5.25 percent and said it saw room for further cuts. The Tel Aviv Stock Exchange's benchmark TA-25 index fell 1.1% to 870.87, the TA-100 shed 0.87% to 890.45, and the Tel-Tech 15 index of top tech issues declined 0.5% to 383.18. Bank Hapoalim, the most-active issue on the bourse, accounted for a seventh of the total TASE volume of $308 million and finished down 1.43% at NIS 20.67. Analysts said the declines reflected options investors positioning themselves before options on the TA-25 index expire on Thursday. As for the rate cut itself, analysts had expected a quarter-percentage-point cut, or possibly even a half-point, in the benchmark rate. Deutsche Bank's analysts had said in a note Monday that "anything less" than half a point would be "accepted with slight disappointment." The Tel Aviv Financials index dropped 1.56% to 1,141.94, with all but one of its 15 members losing ground. Among the banks, Leumi fell 1.73% to NIS 17.07, Discount lost 2.25% to NIS 8.42 and Mizrahi-Tefahot dropped 1.17% to NIS 27.91 The lone financial-index gainer was Direct Insurance, up 0.23% at NIS 17.1. Within the benchmark TA-25, just two members advanced: real estate developer Gazit Globe, up 1.8% at NIS 52.52 and Partner Communications, up 0.34% at NIS 47.22. Gazit Globe was upgraded to "buy" from "market perform" with a NIS 61 price target, by analyst Yuval Ben Ze'ev at Clal Finance Batucha. After them, it was all downhill for companies like turbine builder Ormat, which is the parent of Ormat Technologies. The Tel Aviv Real Estate index fell 0.23% to 644.05. Africa Israel Investments fell 0.78% to NIS 278.6, while Delek Real Estate rose 2.06% to NIS 34.64 and Azorim gained 1.48% to NIS 65.68. Two companies in the Tel-Tech and in the news declined: Tadiran Communications fell 0.46% to NISI 151.9 after it received an $18m. order from an African nation for tactical communications equipment; and Elron Electronic Industries lost 1.97% to NIS 49.7 after it said it closed a $10m. round of financing in Atlantium, a producer of water-disinfection technology. The dollar strengthened to 4.283 shekels from 4.282 on Monday. WALL STREET US stocks were mixed late in Tuesday's session, as a Federal Reserve decision on interest rates neared and investors weighed strong quarterly result from DuPont against a weak sales outlook from chip maker Texas Instruments. The Dow Jones Industrial Average added 9 points, or 0.1%, to 12,126.12, the Nasdaq Composite Index fell 11 points, or 0.5%, to 2,344.90, while the S&P 500 Index edged up 0.3 points to 1,377.35. "It's a combination of concern on how the Fed is going to word its statement and some mixed earnings news over the last 12 hours," said Charles Rotblut, senior market analyst at Zacks.com, an independent research firm, explaining the tepid performance of the market. The Federal Open Market Committee, the Fed's interest-rate setting body, has begun a two-day meeting discussing monetary policy. At the conclusion of the meeting on Wednesday, it is widely expected to announce it will hold its key short-term interest rate, known as the fed-funds rate, steady at 5.25%. EUROPE The French CAC-40 index closed down 0.1% at 5,404.54. The German DAX Xetra 30 index inched up 0.07% to 6,247.52 and the pan-European Dow Jones Stoxx 600 index slipped 0.03% to 354.72. Companies that gained ground Tuesday included travel stocks such as airlines Deutsche Lufthansa and Air France-KLM, which both touched annual highs. The UK's FTSE 100 index added 0.3% at 6,182.50 after gains of 1.1% in shares of oil giant BP offset declines in BHP Billiton and Anglo American. BP reported a 4% profit drop, hurt by flat production and rising taxes. The oil giant also cut its production outlook for the year. ASIA Asian stocks ended on a mixed note Tuesday, with weakness in shares of Japan's two largest mobile operators tugging on the Nikkei 225 while Chinese shares listed in Shanghai surged to five-year closing high. The Nikkei 225 Index closed 0.1% lower at 16,780.47. The broader Topix index added 0.2% to 1,662.53. Shares of Softbank, the third largest Japanese wireless carrier with 15.3 million subscribers, fell 1.1% after the company said it would lower tariffs and offer other incentives in a bid to compete with its two larger rivals, market leader NTT DoCoMo Inc. NTT DoCoMo and KDDI shares both tumbled on concerns a looming price war could undercut profits. A new cellular-phone portability rule has taken effect in Japan enabling customers to switch operators without changing their phone numbers. Australia's S&P/ASX 200 scaled back earlier gains to end down 0.3% as mining shares paced declines in oil and copper prices. Taiwan's Weighted Price Index ended higher 0.8%, while South Korea's Kospi composite rose 0.1%. Hong Kong's Hang Seng Index ended 0.4% higher at 18,153.41. The China Enterprises Index was up 0.6% to 7,496.38. Markets in Malaysia, Singapore and Indonesia were closed for holidays. CURRENCY The dollar traded little changed against major currencies Tuesday, sliding to session lows as traders await an interest-rate announcement by the Federal Reserve Wednesday. In New York trading, the dollar was quoted at 119.26 yen, compared with 119.31 yen late Monday, after rising to 119.65 yen, the highest level since October 16. The euro changed hands at $1.2562, compared with $1.2549. The British pound traded at $1.8741, compared with $1.8733. The dollar was also at 1.2654 Swiss francs, compared with 1.2668 francs. The euro fetched 149.83 yen, compared with 149.72 yen. COMMODITIES Crude-oil futures climbed above $59 a barrel Tuesday, on the heels of a two-session loss of nearly 3%, as traders bet that US data due this week will show a third-weekly decline in distillate supplies as well as a fourth week of rising crude inventories. At the same time, traders continued to doubt the effectiveness of the Organization of the Petroleum Exporting Countries' decision to cut production. Crude for December delivery was up 79 cents at $59.60 a barrel in afternoon trade on the New York Mercantile Exchange, reversing from an earlier low of $58.55 to trade as high as $59.70. The December crude contract closed at a 15-month low Monday on doubts that OPEC's planned production cut of 1.2 million barrels a day starting November 1 would do much to dent hefty global supplies or halt the slide in oil prices. Gold futures closed higher Tuesday, scoring their first gain in three sessions as oil prices strengthened. Gold for December delivery closed up $4.70 at $587.60 an ounce on the New York Mercantile Exchange bouncing off a low of $576, its weakest level since October 12. On Monday, the contract lost more than $13 to tally a two-session loss of $19.60. MarketWatch: In-depth global business coverage

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