The Tel Aviv Stock Exchange (TASE) rose today. The Tel Aviv 25 index rose 0.97% to 1027.94 points, the Tel Aviv 100 rose 1.51% to 930.32 points, and the Tel-Tech rose 4.02% to 202.83 points. Turnover was NIS 2.3 billion.
Trading volatility continued today. After gaining ground in early trading, the leading indices slumped at midday before recovering in the afternoon thanks to gains on European markets and signals of a stable opening to the week on Wall Street.
On the domestic front, the Bank of Israel today published the minutes of last month's interest rate decision to raise the rate by 25 basis points to 3.75%. The minutes state that the decision was unanimous, reflecting concern about an economic slowdown and the need to rein in inflation, especially inflation expectations, back within the target range.
A Prisma Investment House analyst said today, "We believe that the Governor will continue to gradually raise the interest rate. Therefore, unless the June CPI springs a surprise, the interest rate will be raised by only 25 basis points at the end of the month. Nevertheless, we believe that the CPI readings for the rest of the summer (July-September) will be higher than expected, and will push the Bank of Israel to raise the interest rate more sharply than it currently plans, later in the year."
Prisma cautions, however, "If the shekel continues to appreciate, which would worsen the effects on the economy, under a scenario of slower global growth in the coming months, the Bank of Israel will avoid a sharp hike the interest rate and will stick to gradual rate hikes."
In the foreign currency market, the shekel-dollar exchange rate fell another 0.83% to NIS 3.246/$ and the shekel-euro exchange rate fell another 1.06% to NIS 5.084/€. In the bond market, trading in long-term shekel instruments was stable, while prices for index-linked instruments fell by 0.1%.
In the stock market, Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) was the focus of attention following the failure of the trial of the Copaxone 40 mg dosage, which was shown to be no more effective than the 20 mg dosage, and possibly less so. The share fell 5.8%.
Analysts were divided. Clal Batucha Finance analyst Gal Reiter said, "The failure of the trial means that Teva will not be able to extend Copaxone's patent by three more years (to 2017)".
Yet Psagot Investment House analyst Limor Gruber said, "Despite the disappointment, quantifying the economic influence leads us to conclude that the trial results are not devastating for Teva."
IDB Development Corp. Ltd. (TASE: IDBD) also provided drama today. The share rose 10.2% after the company announced a buy-back of 7.5% of its shares, together with a profit warning for the second quarter.
Bank shares rose strongly today, with Bank Hapoalim (TASE: POLI; LSE:80OA) rising 1.1% and Bank Leumi (TASE: LUMI) rising 0.2% following a review by Lehman Brothers, which reiterated its "Overweight" recommendation for Hapoalim and "Market weight" recommendation for Leumi.
Published by Globes [online], Israel business news - www.globes-online.com - on July 7, 2008
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