A look at the day ahead in European and global markets
Fitch delivered the markets a doozy of a surprise with an unexpected downgrade of the U.S. government’s credit rating, by one notch to AA+ from AAA, citing concerns over governance and U.S. debt.
The U.S. government naturally delivered some sharp comebacks in response to the move, which came months after the Biden administration scraped together a deal with conservative lawmakers to avoid a debt ceiling crisis.
The market reaction so far has been fairly mild.
U.S. Treasury yields eased back a touch as investors ironically sought the safety of U.S. sovereign debt, while the dollar also benefited, ticking up against a basket of major peers.
The reaction was a little more pronounced in equities, with S&P 500 and NASDAQ futures slipping around 0.5% each.
Japan’s Nikkei (.N225) suffered a 1.8% drop, but that’s after hovering near post-Bubble highs for most of the past two months.00:03Musk’s X sues nonprofit that fights hate speech
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Chinese markets also took a big hit, led by a 2% drop for Hong Kong’s Hang Seng. But again, these are markets that had been supported by now-waning hopes for big-bang economic stimulus from Beijing.
China’s post-pandemic economic recovery is looking increasingly shaky, judging from the data, with factories and services activity adding to the gloom earlier in the week.
Source: Reuters
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