World stocks flooded with red after US credit rating downgraded

Following the Wall Street market, Asian and European stock markets also fell simultaneously in the trading session on August 2, after Fitch downgraded the US credit rating by one notch.

European stocks fell to near two-week lows in trading on August 2, with technology and auto stocks posting the sharpest declines.

On the morning of August 2 (local time), the European STOXX 600 index fell about 1.1% to 461.06 points, hitting its lowest level since July 20. Similarly, the UK's FTSE 100 index fell 0.9% to 7,598.26 points.

Asian stock markets also witnessed a similar trend, with Hong Kong stocks (China) falling sharply after more than a week of maintaining an upward trend, in which technology "giants" were most affected partly due to China's rules limiting the time children use smartphones.

On the morning of August 2 (local time), Hong Kong's Hang Seng index fell 2.4% to 19,524.84, while Shanghai's Shanghai Composite index also fell 0.9%, closing at 3,261.69 points.

Stock exchanges in Tokyo, Singapore, Mumbai, Seoul, Sydney, Taipei (China), Manila, Bangkok and Jakarta were also in the red.

Earlier, all three major Wall Street indexes fell after news that US manufacturing activity continued to decline in July, marking the ninth consecutive month of decline, a sign that the economy is weakening.

In addition, Fitch's downgrade of the US credit rating from AAA to AA+, citing rising debt burden and deteriorating governance, reflected in the deadlock over the debt ceiling, also made investors more cautious.

Although a deal was eventually reached between Republicans and Democrats, it was not enough to ease investor concerns. Debt limit revisions are not new, but in recent years they have become a partisan bone of contention.

This is also the first time since 2011 that a major rating agency has downgraded the US's credit rating , meaning the federal government will have to pay higher borrowing costs.

Risk-off sentiment also prompted traders to shift to safer assets, such as Treasury bonds or the yen.

In general, experts still believe that this "headwind" is only temporary before traders return to the trend of risky investments, considering that the market has maintained a stable growth momentum in recent times and the belief that the US Federal Reserve (Fed) will soon close the monetary tightening cycle./.

(TTXVN/Vietnam+)

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