Israeli shares dip on Sunday, led by bank and insurance stocks, after Moody’s cut the country’s sovereign credit rating and changed its outlook to “negative.”
Tel Aviv Stock Exchange’s benchmark TA-125 index and the TA-35 index of blue-chip companies fall more than 1% in morning trading in Tel Aviv. The TA index of the five largest banks drops 1.9% and the TA-Insurance & Financial Services slides 1.5%.
Late on Friday, Moody’s lowered Israel’s credit rating by one notch from A1 to A2, citing the impact of the ongoing war with the Hamas terror group in Gaza on the government’s debt burden.
“The local financial market anticipated a rating downgrade but what it did not foresee is the accompanying negative outlook,” says Yaniv Pagot, head of trading at the Tel Aviv Stock Exchange. “The yellow card that Israel received as part of the downgrade obliges the government to take urgent steps to prevent a snowball effect of further downgrades in the future.”