Israeli shares post fresh highs on rate cut hopes
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TEL AVIV, Jan 17 (Reuters) - Israeli shares advanced to new
record highs on Monday, reversing earlier declines on optimism
over the approval of David Klein as Bank of Israel Governor and
hopes for interest rate cuts, traders said.
The benchmark Tel Aviv-100 index rose 4.16 points, or 0.81
percent, to 519.13 on turnover of 605 million shekels compared
with 713 million shekels on Sunday.
Meanwhile, the blue-chip Tel Aviv-25 index increased 4.33
points, or 0.85 percent, to 514.05.
Both indices closed at all-time highs.
The market had lost close to one percent early Monday, but
rose later in the day with the entry of foreign investors and
mutual funds, traders said.
New central bank chief Klein took office on Monday after
being narrowly approved by the cabinet on Sunday. Reputedly an
inflation hawk, Klein said Monday there would be room to cut
rates with lower inflation.
"With 12-month inflation expectations in the market down to
1.7 percent -- far below the government target of 3-4 percent --
everyone is expecting a rate cut at the end of the month," said
a trader at the Ilanot Batucha investment house.
Traders said the market expects Klein to cut the central
bank's 10.7 percent base lending rate by 0.3-0.5 percentage
point.
The shekel advanced against the dollar on Monday to 4.0820
shekels at its representative rate from 4.1020 on Friday, also
boosted by Klein taking office.
Traders said the Israeli currency's rise to its highest
level in nearly seven months also lifted the stock market.
Formula Systems FORT.TA FORTY.O stocks surged 9.85
percent to 223.00 shekels on turnover of 28.3 million shekels.
Traders attributed the rise to expectations of further share
gains on Nasdaq later this week, where Formula stocks also trade.
Blue chip stocks led trading volumes with a generally strong
market sentiment, traders said.
Bank Leumi LUMI.TA shares rose close to 3.0 percent to
9.01 shekels on turnover of 37 million shekels. Bezeq Israel
Telecom BEZQ.TA shares closed up 3.7 percent to 22.40 shekels
on a volume of 33.5 million shekels.
($1 = 4.08 shekels)
REUTERS
Rtr 09:19 01-17-00 |
