Israel Shares Snap Five-Day Gain on U.S. Default ConcernShoshanna Solomon
Israel’s benchmark stock index fell for the first time in six days amid concern talks aimed at averting a U.S. default will fail, threatening growth in the Middle East nation's biggest trading partner.
The benchmark TA-25 Index reversed earlier gains to slide 0.6 percent to 1,285.16 at the close in Tel Aviv, the biggest drop since Oct. 3. Israel Corp. and Gazit-Globe Ltd. led the declines, retreating 2.8 percent and 2.4 percent, respectively. The index climbed every day last week, adding 2.8 percent.
“The market is taking a breather today after recent gains, especially since there is still some uncertainty regarding a positive outcome in the U.S.,” Yaniv Pagot, chief strategist at Ramat Gan, Israel-based Ayalon Group Ltd., said in a telephone interview today. “Investors are hesitant to increase exposure even if most believe the U.S. issue will be resolved positively.”
Senate leaders of both parties in the U.S. began negotiations to prevent a default even as senators blocked legislation and talks between the White House and House Republicans hit an impasse. Democratic lawmakers said yesterday that the lack of movement this weekend may have an effect on financial markets tomorrow.
Last week’s advance in the TA-25 Index brought its gain during October to 2 percent, as tension in the Middle East receded. Syria agreed to hand over its chemical weapons and allow arms inspections, while President Barack Obama and his Iranian counterpart, Hassan Rouhani, spoke by phone on Sept. 27 in the highest-level encounter between leaders of the two countries since 1979.