Asian shares fall after Fitch puts US credit rating on negative watch

Asian shares tumbled on Thursday and Treasury yields hit 20-year highs after Fitch Ratings put the US on negative watch, as policymakers in Washington struggle to reach an agreement to avert an unprecedented government default. Did.

Hong Kong’s Hang Seng index fell 2 per cent, while Australia’s S&P/ASX 200 fell nearly 1 per cent and China’s benchmark CSI 300 index fell 0.5 per cent. The topics of Japan remained flat.

Ratings agency Fitch said it placed its Triple A credit rating for the US on negative watch, signaling to investors that a downgrade could be imminent.

Fitch last moved the US clock to negative in October 2013 during debt ceiling talks in Washington, two days before that year’s so-called X-date, when the government was expected to run out of cash.

“We believe there is increased risk that the debt ceiling will not be extended or suspended before the X-date and that the government may consequently start making payments on some of its obligations,” the rating agency said.

Fitch said its decision “reflects an increase in political partisanship that is hindering reaching a solution on whether to raise or suspend the debt ceiling despite a fast-approaching ex-date”.

The yield on Treasury bills maturing next month – around the expected date when the government could run out of money – eased to 5.67 per cent in Asian trade, down from a high of 5.88 per cent earlier this week but still Near the highest level. more than two decades. Yields on two-year Treasuries and 10-year notes were also slightly lower.

The selloff in Asia followed another poor showing on Wall Street, where the S&P 500 fell 0.7 percent and the tech-focused Nasdaq Composite fell 0.6 percent as traders grew more nervous about the prospect of a US default in June.

However, shares of semiconductors bucked the trend, posting huge gains after US chipmaker Nvidia forecast profits would reach $11bn for the three months to the end of July, fueled by rising demand for chips used in generative artificial intelligence systems. Beyond analyst expectations.

Nvidia shares rose 29 percent in after-market trading following the announcement, while in Asia, Taiwan Semiconductor Manufacturing and South Korea’s SK Hynix rose 3 and 5 percent, respectively.

Futures edged the S&P 500 up 0.4 percent when trading began later on Wall Street, while the FTSE 100 added 0.3 percent.