Aug.29, 2012 | 2:33 AM–The Bank of Israel sent Tel Aviv Stock Exchange shares into the red yesterday, after it took the markets by surprise by leaving its key lending rate unchanged for September and warned that it would be lowering its economic forecast.
The TA-25 Index of blue chips declined to 1,108.23 points, a drop of 0.7%, while the broader TA-100 declined 0.5% to 985.48 points. The TA-Banking Index, dropped 0.5% to 839.94, while the Real Estate Index ended down 0.1% at 232.56. Turnover was just NIS 431 million.
The central bank kept its key lending rate for September at 2.25%, defying majority opinion among economists that the rate would be lowered a quarter point.
The bank explained its decision by pointing to a heating up of the domestic real estate market in recent weeks and concern that a cut in the rate would only exacerbate the trend. It also noted expectations for higher inflation of 0.66% to 0.7% a month in the short term due to tax increases.
The bank said it was likely to adjust its 2013 outlook some time next month “based on developments since the end of June.”
European shares had their worst one-day fall in five sessions yesterday as concerns over the global economy and euro-zone debt crisis, highlighted by bleak figures from Spain, weighed on equity markets.
The FTSEurofirst 300 Index closed down 0.7% at 1,088.62 points, marking its worst one-day fall since a 1.2% decline on August 21. The Euro STOXX 50 Index fell 0.8 percent to 2,442.12 points.
Traders cited some concerns that a global gathering of central bankers in Jackson Hole, Wyoming, on Friday may fail to convince investors that new stimulus measures are imminent.
In Tel Aviv, the Oil and Gas Index shed 0.3% to 909.16 ahead of the publication of the final recommendations of the Tzemach committee on natural gas policy today. Modiin Energy, however, soared 14% and ILDC Energy gained 12.8% by close.
Alrov Real Estate led TA-100 shares lower, falling 3.7% by the end of trading. Other big losers were Yitzhak Tshuva’s Delek Group, which declined 3.5%; Clal Biotechnology, down 3.5%; and Discount Investment Corporation, down 3.1%. Allot Communications closed an arbitrage gap with its new York-traded stock to end down 2.75%.
On the gainers’ side, Menorah Insurance advanced 4.9% and Hadera Paper added 4.4% by the close.
In the bond market, prices were lower. The Tel-Bond indices edged down as much as 0.12%, led by by Nochi Dankner’s IDB Holdings. Among the holding company’s shorter-term bonds, its Series Gimmel inflation-linked bonds dropped 8.5% to a yield of 180% and Series Heh unlinked bonds dropped 7.5% to yield 178%. Both bonds are due in June 2014. Series Dalet, indexed debt as due in December 2020, dropped 7.3% to a yield of 76%. One capital markets analyst attributed the drop to the financial report the group must publish by the end of the week – the final deadline for second-quarter results, and the risk that its auditors will add a “going concern” warning to them…Read More>>