Interest rate hike, Nasdaq, leave Tel Aviv stocks unchanged Tuesday morning

Tel Aviv stocks are trading Tuesday unchanged with a mild negative bias.

The Maof-25 blue chip index is unchanged at 401.6 points, the TA-100 index is slipping 0.1%, and technology shares are off 0.2%.

The negative bias is attributed to the unexpected announcement yesterday by Bank of Israel Governor David Klein that May interest rates will rise 0.2%. Drops on Wall Street on Monday, when Nasdaq closed off 2.1% and the Dow Jones fell 1.2%, are affecting the local mood.

Dual-listed shares opened with negative arbitrage spreads.

DBM CEO Rami Dror believes that stocks will post mild drops today due to the interest rate hike, which together with the previous hike at the end of February offset much of the sharp interest cut last December. Dror said that there is uncertainty about the treasury's economic plan, and that neither the Knesset nor the capital market will welcome it.

Dror explained that the objection to the plan in the capital market is due to the feeling it doesn't involve real cuts in the right places, such as recent populist laws initiated by members of Knesset. The latter involves tax breaks for residents of the Negev, Israel's relatively undeveloped south, and tax breaks for large families. The capital market feels that the economic plan is based on widening the government deficit, and increasing the tax burden. In addition, there is concern that the plan won't pass in its present format due to opposition to the economic plan in the Knesset, mainly from ultra-orthodox parties, whose constituencies benefit from welfare support for large families.

Dror said that the American stock exchange is apparently turning again to a negative trend following recent profit warnings and lowered projections by a number of leading companies, mainly from the communications sector.

Dror estimates that the local negative trend will moderate given that April options on the Maof-25 index expire on Thursday. It is estimated that big Maof players want the index for the purpose of the options to expire at 400 points.

Teva Phamaceuticals (Nasdaq:TEVA) is down 2.2%, closing the entire arbitrage spread it opened on Nasdaq on Monday.

Discount Investments is down 1.4%, attributed to the petition by subsidiary Tevelfor a stay of liquidation proceedings to protect the cable TV firm from its creditors.

Other IDB groups stocks: IDB Holding Corporation is up 0.5%, IDB Development Corporation is off 0.6%.

Today is the market debut of youth-oriented casual clothes maker Fox, which is planning to raise NIS 48 million. Reports say that Clal Insurance will acquire 12% of the offered shares. Market players expect that the share price of Clal Insurance could reflect the value of Fox for the issue. Clal Insurance is up 0.6%. Bank Leumi is also among the buyers of Fox shares.

Bank Hapoalim is down 0.6%, and Bank Leumi is off 0.1%.