US credit rating reduction: Shook the already-shaky stock market. Investors became wary. Investors panicked as US bond rates reached their highest level in nine months. This favored the US dollar over other major currencies. Europe’s markets sank 1.1% after Fitch downgraded the US government. UK stocks fell 1.3% as purchasers awaited the Bank of England’s rate decision.
S&P 500 and Nasdaq futures dipped 0.5% and 0.8%, indicating concern. The stock market fell further due to selling. Good news regarding private jobs and the US government’s willingness to repay debt raised long-term US Treasury yields. Market pressure and investor distrust resulted.
US 10-year and 30-year bond rates to their highest levels in nine months, pushing the dollar to its most substantial level against crucial rivals in four weeks. After solid private payroll data, the dollar rose even higher. The dollar rose versus the Canadian dollar to its highest level in a month.
Economists discussed the Bank of England’s probable 0.25-point rate hike to 5.25 percent. Investors worried that the June half-point boost will happen again, tightening monetary policy. Market concerns increased with speculation.
MSCI‘s broadest measure showed Asia-Pacific equities outside Japan fell 0.4%. The price dropped 2.3% yesterday. Hope remained. Hong Kong’s Hang Seng rose 0.9%, and China’s blue chips 0.3%. China’s service sector expanded in July, private research found. A poor economy rarely received positive news.
Morgan Stanley downgraded China’s stock to “equal weight” due to earnings adjustments, low return on equity, and profit margins. They advised buyers to wait before relisting.
Apple and Amazon’s quarterly earnings releases were keenly awaited to determine if tech stocks’ lofty prices were sustainable.
Before the Bank of England’s action, the pound hovered around $1.27, slightly above the four-week low of $1.2680. The central bank risked tightening money, raising the pound this year.
The Brazilian central bank unexpectedly dropped base interest rates by 50 basis points. After US rates peaked, rates in growing markets fell. This improved emerging country’s economic prospects.
In conclusion, bond yield movements, credit rating downgrades, and interest rate decisions affected markets and investor sentiment. Investors watched major economies and monetary policy to determine how they would spend.