Global markets update: US stocks slump after Fitch downgrades US credit rating.

US stocks slumped as Fitch Ratings downgraded the credit rating of the US government, causing European equities to tumble as well.

US stocks experienced a significant decline on Wednesday following the decision by Fitch Ratings to downgrade the credit rating of the US government. Fitch downgraded the debt rating of the US from AAA to AA, citing concerns about the expected deterioration of the country's fiscal situation over the next three years. The agency also expressed worries about the repeated last-minute negotiations surrounding the debt ceiling, which could potentially undermine the government's ability to meet its financial obligations.

The impact of this downgrade was felt across various sectors of the stock market. The S&P 500, a key indicator of the overall performance of US stocks, dropped by 1.4%. This decline was further exacerbated by poor earnings reports from companies like Generac Holdings and SolarEdge Technologies. Generac Holdings saw its shares plummet by 24.4% after reporting weaker profits, while SolarEdge Technologies experienced an 18.4% decline in its stock price due to lower-than-expected profit and revenue growth.

However, not all companies experienced negative outcomes. CVS Health managed to buck the trend with a 3.3% increase in its stock price after reporting better-than-expected results. Similarly, Humana saw a surge of 5.6% in its stock price after beating profit forecasts. These positive performances helped to somewhat offset the overall decline in the market.

The impact of the US credit rating downgrade was not limited to the US market alone. European equities also experienced a downturn as a result. The pan-European STOXX 600 index fell by 1.4%, reflecting the concerns surrounding the US government's creditworthiness. Major European markets, such as Britain's FTSE 100, Germany's DAX, and France's CAC 40, all saw declines ranging from 1.3% to 1.4%.

In Germany, Telefonica Deutschland suffered a significant drop of 17.9% after its competitor Vodafone announced a roaming deal with 1&1 in Germany. Siemens Healthineers also faced challenges, with a 5.6% decline in its stock price due to a drop in quarterly profit. However, German fashion brand Hugo Boss managed to maintain stability, despite a 1.9% slide in its stock price, as it raised its full-year outlook.

The impact of the US credit rating downgrade was also felt in Asian markets. Hong Kong's Hang Seng index experienced a decline of 2.5%, while China's Shanghai Composite dropped by 0.9%. In Japan, the Nikkei 225 tumbled by 2.3%, and Australia's S&P/ASX 200 index closed 1.3% lower. New Zealand's benchmark S&P/NZX 50 index also ended the day with a 0.2% decline.

Overall, the downgrade of the US credit rating by Fitch Ratings had far-reaching consequences on global stock markets. The concerns about the country's fiscal situation and debt ceiling negotiations created uncertainty and led to a significant decline in stock prices across various sectors and regions. Investors will closely monitor future developments to assess the potential impact on their portfolios and the broader economy.