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The National Times - Stocks markets extend losses on US credit downgrade

Stocks markets extend losses on US credit downgrade

ECONOMY 03.08.2023
Stocks markets extend losses on US credit downgrade
Stocks markets extend losses on US credit downgrade / Photo: © AFP

Major stock markets mostly slid further Thursday as traders moved out of riskier assets and into havens such as bonds, the dollar and yen after Fitch this week stripped the United States of its top credit rating.

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Europe's main equity indices were down around one percent heading into afternoon trading and as the Bank of England was set to announce its latest interest-rate decision at 1100 GMT.

Asian indices also tumbled for a second day running following a slide Wednesday on Wall Street.

"Global markets extended yesterday's declines as investors digested the prospect that US government debt is now considered lower quality following Fitch's downgrade," noted Laith Khalaf, head of investment analysis at AJ Bell.

"The decision by the credit agency to cut the rating led to higher US government bond yields which in turn has a negative impact on equities."

Joshua Mahony, chief market analyst at Scope Markets, said, "US markets look set to maintain the downbeat theme" when Wall Street reopens.

"Yesterday's session saw the Nasdaq suffer its heaviest loss since February, with the dollar the clear beneficiary from the Fitch credit-rating downgrade."

Fitch's decision Tuesday to downgrade the United States to AA+ from AAA sparked a fiery rebuttal from Washington.

Across the Atlantic, the Bank of England is expected Thursday to raise its key interest rate by at least a quarter-point to 5.25 percent as inflation stays high in the UK.

That would be the BoE's 14th hike in a row and highest borrowing cost for more than 15 years.

Later Thursday, Apple and Amazon publish their earnings for the second quarter.

On Friday, all eyes will be on US payroll figures for an idea about the Federal Reserve's next moves on interest rates.

- Key figures around 0945 GMT -

London - FTSE 100: DOWN 1.2 percent at 7,471.26 points

Frankfurt - DAX: DOWN 0.8 percent at 15,884.83

Paris - CAC 40: DOWN 0.9 percent at 7,243.52

EURO STOXX 50: DOWN 0.8 percent at 4,300.94

Tokyo - Nikkei 225: DOWN 1.7 percent at 32,159.28 (close)

Hong Kong - Hang Seng Index: DOWN 0.5 percent at 19,420.87 (close)

Shanghai - Composite: UP 0.6 percent at 3,280.46 (close)

New York - Dow: DOWN 1.0 percent at 35,282.52 (close)

Euro/dollar: DOWN at $1.0929 from $1.0940 on Wednesday

Pound/dollar: DOWN at $1.2663 from $1.2711

Euro/pound: UP at 86.31 from 86.04 pence

Dollar/yen: DOWN at 142.86 yen from 143.37 yen

West Texas Intermediate: DOWN 0.4 percent at $79.14 per barrel

Brent North Sea crude: DOWN 0.4 percent at $82.91 per barrel

J.Sharp--TNT

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