Asian stock markets took a significant plunge following Fitch Ratings’ surprise decision to downgrade US sovereign rating from AAA to AA+. This move mirrors S&P Global Ratings’ decision made over a decade ago, causing considerable unrest among investors.
Fitch’s statement highlighted, “In Fitch’s view, there has been a steady deterioration in standards of governance over the last 20 years, including on fiscal and debt matters, notwithstanding the June bipartisan agreement to suspend the debt limit until January 2025.”
US Treasury Secretary Janet Yellen fiercely contested the downgrade, calling it “arbitrary and based on outdated data.” The White House has also voiced opposition to Fitch’s assessment, with press secretary Karine Jean-Pierre declaring, “It defies reality to downgrade the United States at a moment when President Biden has delivered the strongest recovery of any major economy in the world.”
Both Nikkei and HSI are down more than -2% at the time of writing.
