(Sharecast News) - Asia-Pacific markets declined on Monday as investors reacted to fresh concerns over US fiscal stability and signs of continued softness in Chinese consumer spending.
Moody's Ratings downgraded the US sovereign credit rating from Aaa to Aa1 on Friday, citing growing fiscal deficits and higher refinancing costs in a persistently high-interest-rate environment.
Meanwhile, Chinese retail sales growth slowed in April, highlighting persistent challenges in boosting domestic demand.
"US equity-index futures fell, and the Treasury yield curve steepened after Moody's Ratings downgraded the US government's credit rating from Aaa to Aa1, citing a widening budget deficit that shows few signs of improvement," said TickMill market strategy partner Patrick Munnelly.
"Longer-dated Treasury yields rose, reaching the psychologically significant 5% mark.
"Asian stock markets declined despite China's industrial output growing faster than expected in April."
Munnelly noted that gold prices increased as concerns over the US economic outlook and budget deficit heightened demand for the safe-haven asset.
"The downgrade could exacerbate Wall Street's concerns regarding the US sovereign bond market and revive anxiety over a potential 'Sell America' sentiment triggered by president Donald Trump's trade war.
"This rating cut comes as discussions continue in Congress over more unfunded tax cuts, while the economy appears poised for a slowdown as Trump disrupts long-standing partnerships and renegotiates trade agreements.
"Moody's has joined Fitch Ratings and S&P Global Ratings in assigning a grade to the US economy below the top Aaa level."
Markets broadly lower on US stability, trade concerns
Japan's Nikkei 225 dropped 0.68% to 37,498.63, weighed down by declines in Lasertec, Keisei Electric Railway, and Oriental Land.
The broader Topix index edged down 0.08%.
In Hong Kong, the Hang Seng Index slipped 0.05% to 23,332.72, with technology and automotive shares like Alibaba, Sunny Optical, and Li Auto among the weakest performers.
Mainland China's Shanghai Composite was flat, up just 0.004% at 3,367.58, supported by strong gains in stocks such as Henan Ancai Hi-tech and Shanxi Huayang New Material.
However, the Shenzhen Component dipped 0.08%.
South Korea's Kospi 100 fell 1.09% to 2,592.15, dragged lower by steep losses in Hanjinkal and Hanmi Semiconductor.
Australia's S&P/ASX 200 shed 0.58% to 8,295.10, with resource stocks such as Pilbara Minerals and Mineral Resources sliding sharply.
In New Zealand, the S&P/NZX 50 retreated 1.23% to 12,629.07, led lower by Fletcher Building and A2 Milk Company.
In currency markets, the dollar was last down 0.59% on the dollar at JPY 144.84, as it weakened 0.43% against the Aussie to AUD 1.5544, and retreated 0.32% on the Kiwi, changing hands at NZD 1.6948.
Oil prices were also lower, with Brent crude futures last down 0.73% on ICE at $64.93 per barrel, and the NYMEX quote for West Texas Intermediate off 0.7% at $62.05p.
Retail sales growth slows in China, Thai economy grows more than expected
In economic news, China's retail sales growth slowed in April, adding to concerns over consumer demand in the world's second-largest economy.
Data from the National Bureau of Statistics showed retail sales rose 5.1% year-on-year, below the 5.5% expected by analysts and down from 5.9% in March.
Industrial output, however, grew 6.1%, exceeding forecasts, while fixed-asset investment rose 4.0% in the first four months of the year, narrowly missing expectations of 4.2%.
In Thailand, the economy grew 3.1% in the first quarter of 2025 compared to the same period last year, beating the 2.9% forecast but easing from 3.3% in the prior quarter.
The National Economic and Social Development Council said exports, public investment, and manufacturing supported growth, while private investment declined.
Thailand's government lowered its full-year growth forecast to a range of 1.3% to 2.3%, down from the prior estimate of 2.3% to 3.3%.
Reporting by Josh White for Sharecast.com.
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