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Markets brush aside China rating downgrade

Pedestrians are reflected on an electronic stock board showing Japan's Nikkei 225 index at a securities firm in Tokyo Wednesday, May 24, 2017. Chinese stocks sank Wednesday after Moody's cut the country's debt rating and other Asian markets rose following Wall Street's advance. (AP Photo/Eugene Hoshiko)

LONDON (AP) — Global stock markets traded in narrow ranges Wednesday, with investors brushing aside Moody’s decision to cut China’s debt rating.

KEEPING SCORE: In Europe, the FTSE 100 index of leading British shares was up 0.3 percent at 7,506 while Germany’s DAX fell 0.2 percent to 12,635. The CAC 40 in France was 0.1 percent lower at 5,341. U.S. shares were poised for a flat opening with both Dow futures and the broader S&P 500 futures unchanged.

CHINESE DEBT: Moody’s cut the Chinese government’s rating to a still-relatively robust A1 from Aa3 and changed its outlook to stable from negative. The move, it said, reflects an expectation “China’s financial strength will erode somewhat” and economy-wide debt will rise. The Chinese finance ministry criticized the move and said Moody’s overestimated the difficulties facing the economy while failing to give adequate weight to economic reforms underway.

ANALYST TAKE: “Today’s ratings downgrade reveals little that investors didn’t already know about credit growth in China and the risk that it requires the government to accept a big increase in its debt load in future,” said Mark Williams, chief China economist at Capital Economics. “The greater concern though, we believe, should be that this debt build-up is contributing to a slowdown in China’s sustainable growth rate.”

ASIA’S DAY: Following an early retreat, the Shanghai Composite Index ended up barely changed at 3,064.08. Hong Kong’s Hang Seng ended little-changed at 25,428.50. Tokyo’s Nikkei 225 rose 0.7 percent to 19,742.98 and Seoul’s Kospi gained 0.2 percent to 2,317.34. Sydney’s S&P-ASX 200 advanced 0.2 percent to 5,769.00.

OPEC FOCUS: The OPEC oil cartel and other producers, notably Russia, are this week expected to extend last year’s production cut in a concerted attempt to prevent oil prices from falling. With prices likely to fall because of an oversupply in the market if they don’t, both Russia, and OPEC oil giant Saudi Arabia have spoken out in favor of an extension ahead of Thursday’s meeting.

ENERGY: Benchmark U.S. crude rose 13 cents to $51.60 per barrel in electronic trading on the New York Mercantile Exchange while Brent crude, used to price international oils, advanced 20 cents to $54.35 in London.

CURRENCY: The euro was unchanged at $1.1186 while the dollar rose 0.1 percent to 111.82 yen.

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