Fitch downgraded the U.S. credit rating from AAA to AA+ on Wednesday, citing "expected fiscal deterioration over the next three years." Market analyst mentioned that this will cause risk aversion flows, which will result in lower Asian stocks as well as safe haven buying of treasuries and currencies such as the Japanese yen and Swiss …
Fitch downgraded the U.S. credit rating from AAA to AA+ on Wednesday, citing “expected fiscal deterioration over the next three years.” Market analyst mentioned that this will cause risk aversion flows, which will result in lower Asian stocks as well as safe haven buying of treasuries and currencies such as the Japanese yen and Swiss franc versus riskier currencies such as the Australian and New Zealand dollars.
Japan’s Nikkei 225 led the region’s losses, plunging 2.45%, pressured down by utilities and health-care sectors, while the Topix is also down 1.7%. The Hang Seng index fell by 2.23%, primarily owing to health-care stocks. Mainland Chinese markets were also in the red. The Shanghai Composite fell 0.84%, while the Shenzhen Component down 0.52%. South Korea’s Kospi plummeted 1.83%, while the Kosdaq fell 2.81%. In July, the country’s inflation rate was 2.3%, the lowest level in 25 months. Meanwhile, the ASX 200 in Australia fell 1.17% a day after the Reserve Bank of Australia maintained its benchmark interest rate at 4.1%.
Overnight in the United States, the Dow Jones Industrial Average rose 0.2%, briefly reaching its highest level this year, while the S&P 500 fell 0.27% and the Nasdaq Composite fell 0.43%.
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