Spreadex Market Update

Moody's cuts more debt ratings



Markets opened lower this morning as they digested the news of Moody’s decision to cut the debt ratings of six European countries including Italy, Spain and Portugal. Although seen as being inevitable by many the downgrade nevertheless caused Asian stocks to fall following the news, however Japanese stocks reversed the decline with the news that the Bank of Japan is to expand its asset purchases to spur further growth.

 

The news of the downgrade is likely to be a catalyst for debate in the UK after the ratings agency stated that the outlook for creditworthiness is now negative, warning that weak economic growth threatens government plans to reduce the deficit, and we have already had Ed Balls warning that we could be making similar to mistakes to the Great Depression of the 1930s and comparing ratings agencies’ statements to “a weather vane” showing “which way the wind is blowing”.

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