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U.S. markets may not see lasting impact from Fitch downgrade

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U.S. markets may not see lasting impact from Fitch downgrade

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., July 26, 2023. REUTERS/Brendan McDermid/File Photo

Aug 2 (Reuters) – Most major brokerages do not expect a sustained drag on U.S. financial markets following Fitch’s move to strip the country of its top credit rating, noting that the economy is stronger now than in 2011 when S&P Global downgraded U.S. sovereign debt.

Early moves in U.S. financial markets on Wednesday indicated some aversion to riskier assets as investors assessed the impact of the surprise downgrade.

Stock index futures fell, with Nasdaq futures down 0.7%, while Treasury yields slid by 3 basis points. The dollar climbed 0.2%, after slipping broadly in the wake of the downgrade.

Fitch Ratings on Tuesday cut its rating on U.S. long-term foreign-currency debt by one notch to ‘AA+’, citing fiscal deterioration over the next three years and repeated debt ceiling negotiations that threaten the government’s ability to pay its bills.

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“Investors have lived through the S&P downgrade in 2011 and remember coming away unscathed. Another might be that people have gotten used to an elevated level of deficit spending,” said Steven Zeng, strategist at Deutsche Bank.

“We see the market impact from the downgrade news as ultimately limited, and Friday’s jobs report could trump the downgrade news as monetary policy is still the dominant driver for yields.”

The 10-year U.S. Treasury yield declined about 3.6 basis points (bps) to 4.0109% immediately after Fitch’s decision, indicating investors’ preference for safer assets.

“The Treasury market was highly volatile in the wake of S&P’s downgrade in 2011, but the underpinnings of the U.S. economy were very different then… given the resilience of the U.S. economy and the tightness of labor markets,” said J.P.Morgan rate strategist Jay Barry.

Data released last week showed the U.S. economy grew faster than expected in the second quarter as a resilient labor market supported consumer spending, with markets now pricing in a soft-landing scenario for the economy despite rapid interest rate hikes by the Federal Reserve.

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J.P.Morgan also noted that the spending cuts that ended the debt ceiling crisis of 2011 reduced federal spending by 0.7% of Gross Domestic Product (GDP) the following year, while the deal signed into law earlier this year is expected to lower federal spending by less than 0.2% of GDP next year.

Markets took comfort when Fitch did not adjust U.S. “country ceiling”, which it affirmed at AAA, showing strength in the ability of the corporate sector to convert local currency into a foreign currency for debt repayments.

“If Fitch had also lowered the country ceiling, it could have had negative implications for other AAA-rated securities issued by U.S. entities,” said Goldman Sachs economists led by Jan Hatzius.

Moody’s still holds a ‘Aaa’ rating on U.S. government debt. In a review in July, it cited economic strength, “extraordinary” funding capacity, and “central roles of the U.S. dollar and the U.S. Treasury bond market in the global financial system.”

Reporting by Susan Mathew in Bengaluru; Editing by Saumyadeb Chakrabarty

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Our Standards: The Thomson Reuters Trust Principles.

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French officials arrest multiple suspects in Louvre crown jewel heist

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French officials arrest multiple suspects in Louvre crown jewel heist

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Multiple suspects have been arrested in connection with the theft of crown jewels from the Louvre Museum in Paris last weekend, French officials said Sunday.

Paris prosecutor Laure Beccuau said that investigators made the arrests on Saturday evening, including one man who was taken into custody as he was about to leave the country from Charles de Gaulle airport.

Beccuau did not confirm the number of arrests, though French media BFM TV and Le Parisien newspaper earlier reported that two suspects had been arrested and taken into custody. She did not say whether the jewels had been recovered.

Thieves took less than eight minutes to steal jewels valued at 88 million euros ($102 million) — a high-profile heist that sparked a national reckoning and stunned the world. 

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BRAZEN LOUVRE ROBBERY CREW MAY HAVE BEEN HIRED BY COLLECTOR, PROSECUTOR SAYS

A police car parks in the courtyard of the Louvre Museum, one week after the robbery, Sunday, Oct. 26, 2025 in Paris. (AP Photo/Thomas Padilla)

The crew of thieves used a basket lift to scale the Louvre’s façade, forced open a window, smashed display cases and fled, according to French officials. The Louvre’s director Laurence des Cars acknowledged there was a “terrible failure” in the museum’s security.

Beccuau said investigators from a special police unit in charge of armed robberies, serious burglaries and art thefts made the arrests. She said the premature leak of information could hinder the work of over 100 investigators “mobilized to recover the stolen jewels and apprehend all of the perpetrators.” 

Beccuau said further details will be unveiled after the suspects’ custody period ends.

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Police and moving lift outside the Louvre Museum following jewel heist in Paris.

Police secured the area outside the Louvre Museum in Paris last week, where burglars used a truck-mounted moving lift to reach a second-floor window and steal royal jewelry valued at more than $100 million. (Dimitar Dilkoff/AFP via Getty Images)

LOUVRE DIRECTOR GRILLED ON SPECTACULAR SECURITY FAILURES, INCLUDING CAMERA POINTING AWAY FROM KEY BALCONY

French Interior minister Laurent Nunez praised the investigators for their tireless work, adding that they always had his “full confidence.”

police officers in uniform standing outside the Louvre

Police officers stand near the pyramid of the Louvre Museum after the theft of crown jewels on Oct. 19, 2025. (Gonzalo Fuentes/Reuters)

The thieves slipped away with a total of eight objects, including a sapphire diadem, necklace and single earring from a set linked to 19th-century queens Marie-Amélie and Hortense. They also stole an emerald necklace and earrings tied to Empress Marie-Louise, Napoleon Bonaparte’s second wife, and a reliquary brooch. Empress Eugénie’s diamond diadem and her large corsage-bow brooch — an imperial ensemble of rare craftsmanship — were also part of the loot.

Eugénie’s emerald-set imperial crown with more than 1,300 diamonds was later found outside the museum, damaged but recoverable.

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This is a breaking news story; check back for updates.

The Associated Press contributed to this report.

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Trump meets Brazil’s Lula at ASEAN summit, touts ‘pretty good deals’

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Trump meets Brazil’s Lula at ASEAN summit, touts ‘pretty good deals’

Both countries’ negotiating teams will start ‘immediately’ to address US tariffs and sanctions, says Brazil’s President Lula.

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United States President Donald Trump and Brazil’s President Luiz Inacio Lula da Silva have held what Brazil described as a constructive meeting on the sidelines of the Association of Southeast Asian Nations (ASEAN) Summit in Kuala Lumpur, raising hope for improved relations after stinging US tariffs.

Lula said the Sunday meeting with Trump – who is an ally of his political rival, embattled former Brazilian President Jair Bolsonaro – was “great” and added that their countries’ negotiating teams would get to work “immediately” to tackle tariffs and other issues.

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“We agreed that our teams will meet immediately to advance the search for solutions to the tariffs and sanctions against Brazilian authorities,” Lula said in a message on X following the meeting.

Trump had linked the July tariff move – which brought duties on most Brazilian goods entering the US to 50 percent from 10 percent – to what he called a “witch hunt” against Bolsonaro, far-right leader who has been sentenced to 27 years in prison for attempting a coup after losing the 2022 presidential election.

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Bolsonaro’s supporters rioted in the political centre of the country’s capital, evoking a riot by Trump’s supporters in Washington, DC on January 6, two years earlier.

The US government has also sanctioned numerous Brazilian officials, including Supreme Court Justice Alexandre de Moraes, who oversaw the trial that led to Bolsonaro’s conviction.

Ahead of the meeting on Sunday, though, Trump said he could reach some agreements with Lula and expected the two countries to enjoy strong ties despite his concerns about Bolsonaro’s fate.

“I think we should be able to make some pretty good deals for both countries,” Trump said.

Lula previously described the US tariff hike as a “mistake”, citing a $410bn US trade surplus with Brazil over 15 years.

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‘Conclude negotiations in weeks’

Brazilian Foreign Minister Mauro Vieira said that negotiations would start immediately and that Brazil had requested a pause in tariffs while talks proceed, though it was unclear whether the US had agreed.

“We hope to conclude bilateral negotiations that address each of the sectors of the current American [tariffs on] Brazil in the near future, in a few weeks,” Vieira said.

He added that Lula also offered to help mediate between the US and Venezuela, where Washington has deployed its largest warship and threatened ground strikes targeting alleged drug cartels, operations Caracas has denounced as “fabricated” pretexts for war.

Bolsonaro was not mentioned during the Trump-Lula meeting, said Marcio Rosa, the executive secretary for Brazil’s Foreign Ministry.

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Higher US tariffs on Brazilian goods have begun reshaping the global beef trade, pushing up prices in the US and encouraging triangulation via third countries such as Mexico, while Brazilian exports to China continue to boom.

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ExxonMobil sues California over climate disclosure laws

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ExxonMobil sues California over climate disclosure laws

Exxon Mobil Corporation is suing the state of California over a pair of 2023 climate disclosure laws that the company says infringe upon its free speech rights, namely by forcing it to embrace the message that large companies are uniquely to blame for climate change.

The oil and gas corporation based in Texas filed its complaint Friday in the U.S. Eastern District Court for California. It asks the court to prevent the laws from going into effect next year.

In its complaint, ExxonMobil says it has for years publicly disclosed its greenhouse gas emissions and climate-related business risks, but it fundamentally disagrees with the state’s new reporting requirements.

The company would have to use “frameworks that place disproportionate blame on large companies like ExxonMobil” for the purpose of shaming such companies, the complaint states.

Under Senate Bill 253, large businesses will have to disclose a wide range of planet-warming emissions, including both direct and indirect emissions such as the costs of employee business travel and product transport.

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ExxonMobil takes issue with the methodology required by the state, which would focus on a company’s emissions worldwide and therefore fault businesses just for being large as opposed to being efficient, the complaint states.

The second law, Senate Bill 261, requires companies making more than $500 million annually to disclose the financial risks that climate change poses to their businesses and how they plan to address them.

The company said in its complaint that the law would require it to speculate “about unknowable future developments” and post such speculations on its website.

A spokesperson for the office of California Gov. Gavin Newsom said in an email that it was “truly shocking that one of the biggest polluters on the planet would be opposed to transparency.”

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