ASX 200 Opens Lower After Worldwide Shares Stumble
Investing.com - The Australian stock market is witnessing a downward trend this morning, following an unfavorable global session for stocks. This decline was triggered when Fitch, a renowned credit rating agency, downgraded its assessment of long-term US Treasury notes from AAA to AA+.
As of 10:20am AEST (12:20am GMT), the S&P/ASX 200 were down by 0.8%, while ASX 200 Futures were flat.
The downgrade in America's credit led to significant selling across US stocks and bonds. As a result, Treasury yields hit their peak for the year while major indices experienced one of their worst sessions in recent months.
The S&P 500 saw a decrease of 1.4%, and the NASDAQ Composite lost as much as 2.2%, marking its worst single-day performance since February this year. The Dow Jones Industrial Average also took quite a hit with a reduction of about 348 points or around 1%. These declines were primarily driven by Intel Corporation (NASDAQ:INTC) and Microsoft Corporation (NASDAQ:MSFT) shares' poor performance, while Canadian shares followed suit, with the S&P/TSX Composite falling 1.5%.
Simultaneously, bond prices dropped causing the yield on the 10-year US treasury note to increase up to around 4% - its highest since last November.
These factors have introduced some instability into what has been so far an unwavering rally for most indices throughout much of this year which had previously lifted U.S stocks towards some record highs over past twelve months thereby fueling speculative trading ranging from artificial intelligence ventures right through meme stocks.
Meanwhile on the commodity front; Brent Oil Futures fell just under 2% to settle at $83.43 per barrel, whereas Gold Futures slipped 0.5% to $1935 per ounce.
The Australian dollar was flat at 0.6538.
Asian Stocks Take a Hit Amid Economic Uncertainty and US Credit Rating Downgrade
Global stocks, led by the Chinese market, saw a downturn on Wednesday, led by the banking and energy sectors. The Industrial and Commercial Bank of China Ltd (SS:601398) experienced a 2.3% dip while PetroChina Co (SS:601857) lost 5.6%. This development comes in the wake of Beijing's recent pledge to inject more support into its economy - an initiative that Goldman Sachs (NYSE:GS) analysts believe will lead to further monetary policy easing due to weak growth momentum and low inflation levels.
Despite this setback, Wednesday's session saw property shares and retailers making gains with Greenland Holdings Corp Ltd (SS:600606) increasing by 1.2% alongside Yonghui Superstores Co Ltd (SS:601933) which soared by 9.9%. However, these increases didn't prevent the Shanghai Composite Index from closing down at 0.9%, ending on 3261 points.
Across the sea in Hong Kong, Hang Seng Index wrapped up with a sharp decline — down by 2.5% at just over nineteen thousand points; it’s most severe loss in over four weeks.
The Nikkei 225 also felt repercussions as uncertainty on global economic prospects lingered following the Fitch credit downgrade, resulting in Nomura Holdings Inc (TYO:8604) plunging 1.4% yesterday while Tokio Marine Holdings, Inc. (TYO:8766) dropped 0.9%.