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Monday
Aug082011

Asian Markets Close Down After Downgrading of US Credit Rating

Hemera Technologies/Thinkstock(TOKYO) -- After opening the day down 1.4 percent and holding steady during morning trading, Tokyo's Nikkei stock market tumbled Monday afternoon, closing the day down 2.2 percent in its first day of trading since the United States' credit rating was downgraded for the first time in history last week.

The drop came even after G7 nations pledged to take measures to support financial stability and growth.

The news in other Asian markets was not so promising.  Hong Kong's Hang Seng plunged over three percent and South Korea's Kospi slipped 3.8 percent.

Australia's S&P/ASX-200 index also ended the day down 2.9 percent and indexes in New Zealand fell close to three percent.

The mixed reports likely won't do much to quell growing concerns that Standard & Poor's downgrade of the U.S. credit rating from AAA to AA+ could rock global financial markets.

There are efforts across the world to calm markets in light of the downgrading, which the White House has labeled "amateurish" and "breathtaking."

President Obama himself, however, has not spoken.  Returning from Camp David on Sunday, the president waved off reporters asking questions about the first downgrading ever of U.S. credit.

Even with the administration's heated criticism of S&P over the downgrading, the rating agency is not only standing by the decision, it is saying a further downgrade is possible if the United States doesn't solve its debt problem in two years.

The rating agency's managing director John Chambers said Sunday on ABC News' This Week with Christiane Amanpour that there's "at least a one in three chance of a downgrade over that period."

He has blamed the downgrade squarely on Washington politics, saying "this is not a serious way to run a country."

"Our job is to hold the mirror up to nature, and what we are telling investors is that we have a spectrum that runs from AAA to D," Chambers told ABC News.  "And what we're seeing is that the United States government is slightly less credit worthy."

The rating agency says Washington has shown an inability to reach political consensus, which was highlighted by the debate on the debt ceiling, and this leaves the U.S. "less stable, less effective."

Copyright 2011 ABC News Radio

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