Tel Aviv Stock Exchange opens to 6% losses as global crisis felt in Israel
Losses come as international markets are left reeling by Standard & Poor’s downgrade of U.S. credit rating for first time in history.
The Tel Aviv Stock Exchange opened to major losses Sunday, as indices plunged by more than 6 percent, immediately prompting a series of brief suspensions in trading.
Upon opening, the TA-25 fell 5 percent to 1,100 points; the TA-100 plunged 5.2 percent; the TA-Banking Index dropped 5.3 percent; and the TA Real-Estate 15 fell 6.4 percent.
The losses come as the international markets were left reeling by the announcement Friday that Standard & Poor’s had downgraded the U.S. credit rating for the first time in history.
Trading began for several minutes in Tel Aviv on Sunday, but suspensions began almost at once, as the bourse reverted to what has been dubbed an “English opening.”
This measure aims to curb massive swings in the indices, primarily by extending the pre-opening trading phase in order to allow investors more time, in an effort to stabilize the market.
The move by the key credit agency reflected disappointment with last week's pact hiking the U.S.-borrowing limit, which called for roughly $2 trillion in deficit cuts over the next decade. It had previously called for cuts approaching $4 trillion.
Standard & Poor's cited "difficulties in bridging the gulf between political parties" as a major reason for the downgrade to AA +, a level down from AAA. The rating agency has essentially lost faith in Washington's ability to work together to address its debt.
The downgrade, hours after markets closed on Friday, is a first for the United States since it was granted an AAA rating in 1917. S&P warned about a downgrade as far back as April. S&P said Friday the planned deficit cuts did not go far enough.