The stock market is an accurate indicator of the current economic situation. Often, authorities report various rises, make announcements about the resilience of the global economy, and promise a rosy future. However, the market statistics show the opposite situation. At present, the United States is suffering problems, which are clearly reflected by market indicators.
Challenges faced by the United States always affect the whole world. Any financial crisis that occurs in this country is of global importance. That is why gloomy forecasts about the largest economy in the world have an immediate influence on all markets. Thus, stock indices in the Asia-Pacific region slumped amid investors’ concerns about the US economic slowdown after Fitch downgraded the country’s credit rating to AA+ from AAA. The main Japanese index Nikkei dropped by 2.3%, Hong Kong’s Hang Seng lost 2.47%, and the Shanghai Composite slid by 0.89%. Meanwhile, the South Korean KOSPI decreased by 1.9% and the Australian S&P/ASX 200 declined by 1.29%. At the beginning of the month, the situation in the US stock market was no better. Futures on such indices as the S&P 500 and the NASDAQ 100 also depreciated.
IG Analyst Tony Sycamore supposes that traders are estimating the rising risk of economic growth slackening in the US and not the cut of the Fitch rating. The first signs of a decline appeared earlier amid the publication of disappointing data in the United States and China. IG market analyst Tony Sycamore said "this will spark risk aversion flows, which means lower equities in Asia as well as safe haven buying of treasuries and currencies such as the Japanese yen and Swiss franc against riskier currencies, such as the Australian and New Zealand dollars." This slump in the stock indices of the Asia-Pacific region is one of the most considerable in the last four weeks. Market analyst Alexandre Baradez thinks that the tumble was caused by other reasons than locking in profits.
