TASE ends Thursday flat as hopes of another rate rise are dashed - TheStreet

Tel Aviv stocks lost mild afternoon gains to finish the Thursday session flat as a pancake.

Stocks had sustained mild gains until about 15:30 as investors applauded several cheery first-quarter reports, and because of the expiry of May options on the Maof-25 index. Also, most pundits had assumed the Bank of Israel would today announce an imminent interest rate hike, on top of the 1% key lending rates are being kicked up for June.

But anticipation of another rate rise that might boost stocks was dashed at the central bank's press conference today, and stocks began to gently slide, though the shekel-dollar arena also remained stable on the news.

The banks sustained gains throughout the day but finally eroded, with the banking index ending half a point down. IDB group stocks also took a battering as trading wore on.

Maof options for May expired this morning with a theoretical expiration rate of 384.7 points, up 0.9% from yesterday's closing index. Turnover at expiry was NIS 241 million, on the low side for an expiration day. Total equity turnover at the end of the session neared half a billion, again not impressive for an options expiration day.

Expiration is usually very close to the beginning of trade, but it was slightly delayed this morning because of a halt in trade in Maof-listed stock Discount Bank, which announced financials.

The Maof-25 blue chip ended the day, the last in the trading week on the Tel Aviv Stock Exchange down 0.3% at 385.6 points. The TA-100 index traded up 0.8%. The Tel-Tech finished flat as a pancake, after several days of beating the other TASE indices.

DBM Investment House CEO Rami Dror said that the quiet options expiry indicates that market players managed to roll over positions in recent days. The fact that the June futures traded lower than May yesterday enabled arbitrage players to update positions, coming into expiry with demand and raising the expiry index.

Bank shares had been boosted by the publication of financials by banks Hapoalim, Discount and Mizrahi, but ended with a negative bias. Pleased investors sent all three into the green in the afternoon but Hapoalim regressed to finish down 1%. Discount rose 0.7%.

Bank Mizrahi gained 2% despite a minor embezzlement scandal hitting the headlines this week. Mizrahi has exhibited strength this week despite a stream of shares hitting the floor from bank employees, for whom lockup ended this week on the bank's 1998 issue.

Bank Leumi, which published results at the beginning of the week, ended down 0.8%, reversing from a mid-day gain of 1.5%. The provision for doubtful debt that Leumi reported had been significantly below expectations, but as the pundits pointed out, its provision only covered two months, not three.

IDB shares attracted a great deal of interest ahead of financials, which were published shortly before closing. In the afternoon most of the group companies were firmly in the green, but they closed the session mixed. They finished with IDB Development Corporation up 0.7%, IDB Holding Corporation losing 0.6%. Clal Industries, which already announced its first-quarter results, edged up by 0.1%.

Thursday afternoon IDB group company Discount Investment Corporation announced netting NIS 287 million for the first quarter, that on exercising options it received from the pan-European cable company UPC. It also compares nicely with the NIS 988 million it lost in 2001. In the first quarter of 2001 DIC lost NIS 95 million.

Another ray of light for DIC was that its share in losses of subsidiaries shrank like ice in hell, from NIS 107 in the first quarter of 2001, and NIS 668 million for the whole year 2001 ¿ to NIS 10 million in the first three months of this year.

So how did investors react to the financials emanating from Discount Investment Corporation? They sent it down 2.1% on huge turnover of NIS 26 million.

Giant Teva Pharmaceuticals (Nasdaq:TEVA) sagged by 0.3% on massive turnover, as usual, of NIS 62 million.