Global Markets:
- Asian Stock Markets : Nikkei down 2.27%, Shanghai Composite down 0.90%, Hang Seng down 2.41%, ASX down 1.29%
- Commodities : Gold at $1986.85 (+0.41%), Silver at $24.45 (+0.54%), Brent Oil at $85.69 (+0.94%), WTI Oil at $82.14 (+0.96%)
- Rates : US 10-year yield at 4.012, UK 10-year yield at 4.4335, Germany 10-year yield at 2.4945
News & Data:
- (USD) ISM Manufacturing PMI 46.4 vs 46.9 expected
- (USD) JOLTS Job Openings 9.58M vs 9.61M expected
- (USD) ISM Manufacturing Prices 42.6 vs 43.8expected
Markets Update:
Asia-Pacific markets experienced a decline on Wednesday following the announcement by ratings agency Fitch, which downgraded the U.S. credit rating from AAA to AA+. The downgrade was attributed to the “expected fiscal deterioration over the next three years.” As a result of this news, there was an increase in risk aversion flows, leading to lower equity performance in Asian markets. Additionally, investors sought safe havens such as treasuries and currencies like the Japanese yen and Swiss franc, while shying away from riskier currencies like the Australian and New Zealand dollars.
The Japanese stock market was significantly impacted, with the Nikkei 225 leading the losses, falling by 2.27% and closing at 32,707.69. This drop was primarily driven by declines in utilities and health technology stocks. The Topix index also experienced a downturn, closing 1.52% lower at 2,301.76. Similarly, Hong Kong’s Hang Seng index slipped by 2.41%, mainly influenced by declines in health-care stocks. Mainland Chinese markets were also affected, with the Shanghai Composite sliding by 0.90% and the Shenzhen Component down by 0.49%.
South Korea’s Kospi suffered a 1.9% decline, closing at 2,616.47, which marked the end of a four-day winning streak. Additionally, the Kosdaq index dipped by 3.18% to 909.76. In economic news, South Korea reported its inflation rate for July at 2.3%, the lowest level in 25 months. In Australia, the S&P/ASX 200 index dropped by 1.29% and closed at 7,354.7. This decline followed the Reserve Bank of Australia’s decision to maintain its benchmark interest rate at 4.1%.
The previous day’s trading in the U.S. showed mixed results, with the Dow Jones Industrial Average gaining 0.2% and briefly reaching its highest level of the year. On the other hand, the S&P 500 lost 0.27%, and the Nasdaq Composite was down by 0.43%. Overall, the global market sentiment was impacted by the U.S. credit rating downgrade and investors’ concerns about potential fiscal challenges in the coming years.
Upcoming Events:
- 12:15 PM GMT – USD ADP Non-Farm Employment Change
- 2:30 PM GMT – USD Crude Oil Inventories
