JAKARTA – Asia-Pacific stock markets declined after disappointing economic data from China and a credit rating downgrade of the United States by Moody’s Ratings on Monday (19/5).

Hong Kong’s Hang Seng Index fell 0.73%, the CSI 300 in Shanghai and Shenzhen dropped 0.48%, Japan’s Nikkei 225 weakened 0.54%, and South Korea’s Kospi slipped 0.47%.

Australia’s S&P/ASX 200 also edged down 0.15% ahead of the Reserve Bank of Australia’s (RBA) two-day interest rate decision.

Moody’s downgraded the US government’s long-term debt rating by one notch, from Aaa to Aa1, citing growing challenges in funding the widening budget deficit and soaring refinancing costs in an era of elevated interest rates.

This move places Moody’s in line with S&P (which downgraded the US in 2011) and Fitch (2023), both of which had already rated the US at AA+.

According to Adam Khoo, a Singapore-based businessman and professional stock investor, in a post on his Facebook page, historical data shows that each time the US credit rating is cut, the S&P 500 tends to fall by around 10%.

Back in August 2011, S&P was the first global credit rating agency to downgrade the US. The S&P 500 then dropped by 10.37% within 41 days following the announcement.

A similar trend occurred when Fitch Ratings cut the US credit rating in August 2023. The S&P 500 fell by 10.31% over the course of 58 trading days.

Vasu Menon, Managing Director of Investment Strategy at OCBC Bank, told CNBC on Monday (19/5) that the downgrade “does not necessarily trigger massive selling of US stocks or bonds,” citing the 2011 and 2023 episodes, but it does once again highlight the persistent issues of US deficits and national debt.

The impact was immediately felt in Wall Street futures. Dow Jones futures fell by 292 points (0.7%), S&P 500 futures dropped 0.7%, and Nasdaq 100 futures lost 0.8%.

This came just as major US indices had rallied for four consecutive days, buoyed by temporary tariff reductions on Chinese goods and encouraging inflation data.

At Friday’s close (17/5), the S&P 500 rose for a fifth straight session to 5,958.38 (+0.70%), while the Nasdaq Composite reached 19,211.10 (+0.52%). The Dow Jones jumped 331.99 points to 42,654.74, turning positive for 2025 despite weak consumer sentiment surveys and persistent inflation. (EF/ZH)