Thanks to the bipartisan US budget deal being passed in the US Senate, Israeli stocks have seen the biggest surge in last 3 months, thereby starting the New Year on a good note. The bipartisan budget deal is going to undo the potential economic harm of around $600 billion in spending cuts and increasing taxes. The benchmark gauge of Israeli stocks, TA-25 soared higher as 24 of the 25 total members saw increases as well. The index advanced by 1.8%. The Israeli bonds, on the other hand, experienced fall due to risk appetite of the investors seeing an increase. The yield on the benchmark 10-year bond has gone up by 4 basis points and is at 3.65% currently. The major currency of Israel, Shekel has also seen increase of 0.1% and is currently priced at 3.7302 per USD.
Incidentally, the Senate deal has now shifted the pressure on the laps of John Boehner, the House Speaker. Boehner has not said that he is going to accept the bipartisan agreement. Reportedly, his Republican counterparts are going to create trouble if any bill which proposes higher taxes in the New Year than what it was in 2012 is passed.
The Departmental Head of Migdal Capital Markets Limited’s International Sales Desk, Sharon Naveh stated that the entire world was uncertain on the possibility of a deal being passed. Sharon added that as the new deal is confirmed now, the investors are relieved that the overall global economic situation will not experience any sort of rapid decline. As part of the deal, the automatic spending cuts will now be delayed for another 2 months. Additionally, many households will enjoy the benefits of the tax cut as well, which would have expired on midnight of the year ending day. The several other benefits for the citizens will continue to be given as well.
The gains of the Israeli benchmark index were mostly led by the oil refineries. The oil refineries actually advanced by around 4.6% which marks the biggest gain since 30th October, 2012. Haifa, the renowned Israel based petroleum products’ distributor recorded higher stock prices after announcing the different cost-cutting measures such as 10% reduction in the high salaries of the directors’ and executives’ of the company. According to economists, this step shows that the company is willing to become more efficient in future.