Weakness Across The Board, US Futures Weaker Post Fitch Downgrade

Regional equities are down across the board today. We had the weaker lead from EU/US markets on Tuesday, followed by the earlier news today of the Fitch downgrade for the US credit rating. US equity futures gapped lower when they re-opened and while we are away from worst levels, we remain comfortably in the red. Eminis were last around 4580, -0.47% lower, while Nasdaq futures were off by -0.58%.

• The reaction in US government bond markets has been fairly muted, with yields higher versus earlier lows, suggesting little safe haven bid in this part of the market post the ratings news. Hence weaker equity sentiment may reflect other factors, such as the continued climb higher in real yields (10yr now up to 1.68% in Tuesday trade).
• China related markets are lower. The HSI off by 2% at the break, with tech weaker. The Golden Dragon index did fall by 2% in US trade on Tuesday. The HSTECH index is off by 2.56%.
• Further talk of property stimulus, with the PBoC reportedly set guide mortgage rates lower for existing loans not enough to drive better sentiment. On the mainland, the CSI 300 is off -0.70% at the break, while the Shanghai Composite is down by 0.84%. The CSI 300 real estate sub index is down from early session highs.
• The Kospi and Taiex are both down by around 1.70% at this stage. The Kosdaq falling 2.8%. The Nikkei 225 is down around 2%.
• In SEA, the Philippines bourse is the worst performer, down over 1.5%. Other indices are tracking lower, but losses are less than 1% at this stage.