Asian stocks fall on Moodys warning

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Asian stocks fall on Moodys warning

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Asian markets fell Thursday after Moody's warned it could downgrade the US debt rating.

14 July,2011 02:01 pm

Moody’s have raised fears of a default by Washington.Moodys blamed lawmakers failure to hammer out a deal that would allow President Barack Obama to raise the countrys debt ceiling, in turn paving the way for it to meet its repayment obligations.With trillions of dollars of US debt held by countries and corporations around the world, a US ratings downgrade would send global markets into a downward spiral.Tokyo shed 0.27 percent, or 27.02 points, to end at 9,936.12, with exporters hurt by the yens strength against the greenback, and Sydney closed 0.53 percent, or 24.1 points, off at 4,490.7.Hong Kong fell 0.65 percent in the afternoon.Seoul was flat, edging up 0.43 points to close at 2,130.07 but Shanghai gained 0.18 percent.The review of the US governments bond rating is prompted by the possibility that the debt limit will not be raised in time to prevent a missed payment of interest or principal on outstanding bonds and notes, Moodys said.Ratings agency Standards & Poors in April also downgraded its outlook for the US, citing the budget deadlock.The action came as Obama and Democratic lawmakers and their Republican counterparts held a fourth straight day of talks to try to hammer out an agreement on a deficit-reduction budget.Republicans are refusing to lift the countrys $14.29 trillion debt ceiling without deep government spending cuts, and they reject Democrats demand that tax increases must be part of any sweeping deficit reduction plan.The prospect of a downgrade hammered the dollar, which has tumbled since the end of last week after poor jobs data and the ongoing eurozone debt crisis, while the yen surges due to its safe-haven status.