Global Markets Fall After U.S. Credit Downgrade

Global stock markets fell Wednesday, August 2, 2023, after ratings agency Fitch downgraded its US credit rating, citing “a steady deterioration in standards of governance” and the American government’s growing debt burden, Laura He and Anne Cooban reported for CNN.

Photo Insert: US stock futures slipped. The S&P 500 index was down 0.8% and the Nasdaq was down 1.2% in pre-market.

Japan’s benchmark Nikkei 225 index had its worst day of the year, ending down 2.3%, while Hong Kong’s Hang Seng Index closed down 2.5%, after Fitch cut its rating on US debt to AA+ from AAA on Tuesday.

European stocks fared a little better but the region’s benchmark Stoxx 600 index fell 1.4% by 5.57 a.m. ET to its lowest level in two weeks. Germany’s DAX slid 1.4% and France’s CAC 40 fell 1.2%, while London’s FTSE 100 also hit a two-week low, down 1.5%.

US stock futures slipped. The S&P 500 index was down 0.8% and the Nasdaq was down 1.2% in pre-market. But US Treasuries prices ticked higher, shaving a couple of points off the 10-year yield to 4.03%.

The credit rating downgrade comes after US lawmakers negotiated up until the last minute on a debt ceiling deal earlier this year, risking the nation’s first default.

In a meeting with Biden administration officials, representatives from Fitch also repeatedly highlighted the January 6th insurrection as a significant concern as it relates to US governance, a person familiar with the matter told CNN.

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