Australian shares drop 0.5% after US credit rating cut
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More news: The Australian sharemarket has opened lower, tracking US futures down after ratings agency Moody’s stripped the US of its prized AAA credit rating late on Friday.
The benchmark S&P/ASX 200 index was up 37.40 points or 0.45% to 8,306.30 after the first half hour of trade, led by losses in materials, financials and consumer sectors.
Top miners BHP, Rio Tinto and Fortescue were each down more than 1.5% each, while Commonwealth Bank was the only one among the Big Four banks trading higher. Other major losers included Macquarie Group and appliances maker Breville, down 2.2% and 3.7% respectively.
The local losses follow a 0.6% drop in US stock futures in after-hours trading. On Friday, Moody’s downgraded US sovereign debt one notch to Aa1, citing large fiscal deficits and higher interest costs. Ahead of that announcement, all three major US indices ended higher amid cautious optimism about US President Donald Trump’s softening stance on trade.
Australian shares to open lower after US credit rating cut
The news: The Australian sharemarket is set to open lower despite gains on Wall Street on Friday after ratings agency Moody’s downgraded the US sovereign credit rating amid concerns about rising government debt levels.
The numbers: Updated at 7.25am AEDT:
- ASX futures: down 7 points or 0.08% at 8,360 points
- Wall Street: Dow Jones up 0.78%, S&P 500 up 0.70%, Nasdaq up 0.52%
- Europe: FTSE 100 up 0.59%, CAC 40 up 0.42%, DAX up 0.30%
- Spot gold: down 1.12% at USD3,203.65 per ounce
- Oil prices: Brent up 1.36% to USD65.41/bbl, US WTI up 1.41% to USD62.49/bbl
- AUD: down 0.23% at 63.98 US cents
- Bitcoin: up 1.14% to USD104,356.20.
The context: Moody’s downgraded US sovereign debt rating one notch to Aa1, citing large fiscal deficits and higher interest costs, after US markets closed. Earlier, all three major US indices ended higher on the back of the US-China tariff truce earlier in the week, despite data showing a deterioration in consumer sentiment. The market is cautiously optimistic about US President Donald Trump’s softening stance on trade, but is waiting to see where the US eventually lands on tariffs. Investors are also awaiting clarity on US tax policy in the form of Trump's sweeping tax bill.
What to watch: Two-day RBA Monetary Policy Board Meeting to begin today.
