Global stock markets plunged after the US credit rating was downgraded.

Following Wall Street's lead, Asian and European stock markets also fell simultaneously on August 2nd, after Fitch downgraded the US credit rating by one notch.

Following Wall Street's lead, Asian and European stock markets also fell simultaneously on August 2nd, after Fitch downgraded the US credit rating by one notch.

On August 2nd , European stocks fell to near their lowest levels in two weeks, with technology and automotive stocks experiencing the sharpest declines.

On the morning of August 2nd (local time), Europe's STOXX 600 index fell by approximately 1.1% to 461.06 points, reaching its lowest level since July 20th. Similarly, the UK's FTSE 100 index dropped 0.9% to 7,598.26 points.

Asian stock markets also witnessed a similar trend, with Hong Kong (China) stocks falling sharply after more than a week of gains, with tech giants being the most affected, partly due to China's regulations limiting children's smartphone use.

On the morning of August 2nd (local time), Hong Kong's Hang Seng index fell by 2.4% to 19,524.84, while Shanghai's Shanghai Composite index also dropped 0.9%, closing at 3,261.69 points.

Stock exchanges in Tokyo, Singapore, Mumbai, Seoul, Sydney, Taipei (China), Manila, Bangkok, and Jakarta also plunged into the red.

Earlier, all three major Wall Street indexes fell after news that US manufacturing activity continued to decline in July, marking the ninth consecutive month of losses, a sign that the economy is weakening.

In addition, Fitch's downgrade of the US credit rating from AAA to AA+, citing increasing debt burden and deteriorating governance as reflected in the deadlock over the debt ceiling, has also made investors more cautious.

Although a final agreement was signed by both the Republican and Democratic parties, it was not enough to dispel investors' concerns. The issue of amending the debt limit is not new, but in recent years it has gradually become a partisan point of contention.

This also marks the first time since 2011 that a major rating agency has downgraded the U.S. credit rating . This means the federal government will have to pay higher borrowing costs.

Risk aversion also leads traders to shift towards safer assets, such as treasury bonds or the Japanese yen.

Overall, experts still believe this "headwind" is only temporary before traders return to risky investment trends, given that the market has maintained stable growth recently and confidence that the US Federal Reserve (Fed) will soon end its monetary tightening cycle.

(VNA/Vietnam+)

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