Israel’s benchmark stock index advanced for a seventh day, tracking gains in U.S. shares last week, as investors weighed lower borrowing costs and Iran’s nuclear accord with world powers. Saudi shares rose.
The TA-25 Index (TA-25) increased as much as 0.7 percent to 1,354.53, the highest intraday level on record. The index, which closed at a record on Nov. 21, closed up 0.5 percent at 1,352.96 in Tel Aviv. Bank Leumi Le-Israel Ltd. climbed to the highest in more than two years while Cellcom Israel Ltd. (CEL) advanced 2.2 percent. Saudi Arabia’s Tadawul All Share Index advanced 0.6 percent.
U.S. stocks rose for a seventh week, sending the Dow Jones Industrial Average to the longest stretch of gains in almost three years, as improved data on employment and retail sales offset concern that economic stimulus will be cut. The Bank of Israel, which will decide monetary policy, has reduced the key interest rate to 1 percent from 3.25 percent since 2011 to spur the export-driven economy.
“The market is rising on momentum fueled by what’s happening in the world and low local interest rates,” Idan Azoulay, managing director at Tel Aviv-based Epsilon Investments, which manages the equivalent of about $2 billion, said by phone. “Iran is not a factor in trading today.”
Iran and world powers struck an accord today that broke a decade-long diplomatic stalemate, setting limits on the Islamic Republic’s nuclear program in exchange for relief from sanctions. Israeli Prime Minister Benjamin Netanyahu told the cabinet that the deal is a “historic mistake.”
“Everyone was expecting an agreement with Iran,” Steven Shein, a trader at Psagot Investment House Ltd. in Tel Aviv, said today by phone. “Further impact over the Iran deal will play out over coming weeks.”
Israel’s benchmark stock index has risen 14 percent this year compared with a 21 percent gain in the MSCI World Index and a 27 percent advance in the S&P 500 Index. Bank Leumi, the country’s second-largest lender by assets, increased 2.2 percent to 14.24 shekels, the highest level since August 2011. Cellcom is the best performing stock on the gauge this year.
Twenty of 23 analysts surveyed by Bloomberg expect the Bank of Israel to hold the rate at 1 percent. The yield on the government’s 4.25 percent benchmark bond due 2023 fell six basis points, or 0.06 percentage point, to 3.56 percent.
Saudi Arabia’s benchmark climbed the most since Nov. 17 to 8,388.17 as Saudi Basic Industries Corp., the world’s second-biggest chemicals maker, rose 1.2 percent. The Bloomberg GCC 200 Index of Gulf shares, Kuwait’s gauge and Qatar’s advanced 0.4 percent.
“The Iran deal is very good as it will benefit the GCC economies in the long term,” Tariq Qaqish, who oversees about 500 million dirhams ($136 million) as head of asset management at Dubai-based Al Mal Capital PSC, said by phone today. “It will enhance the trade between the Gulf and Iran.”
The Strait of Hormuz, the waterway through which about 20 percent of the world’s oil is shipped, separates Iran from six-member Gulf Cooperation Council countries, including Saudi Arabia. The agreement is the first to be reached since Iran’s atomic energy work came under international scrutiny in 2003. The country’s automotive and petrochemical industries will benefit from the eased sanctions.
The accord comes less than six months after Iranian President Hassan Rouhani won a surprise first-round election, campaigning on pledges to resolve the nuclear dispute. He inherited an economy in recession and an inflation rate that was 40 percent last month.
The rial appreciated 2.3 percent since yesterday to 29,300 a dollar this afternoon in Tehran compared with about 30,000 yesterday, according to prices provided by five street traders in the Iranian currency black market.
The currency lost more than half its value in the year before Rouhani’s election in June, due in part to sanctions denying Iran access to the world financial system.
The two sides now aim to conclude a comprehensive accord within six months. Western nations have accused Iran of harboring nuclear-weapons ambitions, a charge it denies. The U.S. and Israel have said they are willing to use force if needed to prevent that from happening.
Dubai’s benchmark index, up 77 percent this year, lost 0.5 percent, while Abu Dhabi’s ADX General Index declined 0.3 percent. Bahrain’s measure dropped 0.3 percent and Oman’s MSM30 fell 0.1 percent. Egypt’s benchmark EGX 30 Index slipped 0.3 percent.
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