Standard & Poor’s recently downgraded nine European countries, including France. The ratings imply that a solution to the issues in the region has yet to be found as the Eurozone debt crisis festers. Though the downgrades were expected by many, the situation remains shaky as concerns begin to spread.
“The downgrade set a nervous for this week’s markets as we approach more significant hurdles in the evolution of the Eurozone crisis,” said Ric Spooner of CMC Markets.
Asian stocks have slipped as a result of the ratings. MSCI’s index of Asia Pacific shares, excluding Japan, fell 0.3% after reaching a one-month high last week, while Japan’s Nikkei slid down to 1.51%. Hong Kong’s Hang Seng fell 1.01%, the Shanghai Composite 0.75%, and Korea’s Kospi dropped 1%.
Markets across the globe are bracing themselves as negotiations regarding the Greek and Eurozone debt remain relatively stagnant despite several efforts to get them moving.
“Failure of these negotiations remains a significant contagion risk,” Spooner explained.
At the moment, experts have projected an 8.7% growth in China’s economy for 2012. This growth will have a significant impact on the region, and will ease numerous financial pressures. If GDP does not, in fact, meet expectations, it may result in export-led downturns that China will be unable to resolve.