Impact of French downgrade may trickle down to Asia

<p>Asian stocks are set to open lower following the downgrade of France’s credit rating over the weekend. Germany remains the only Euro country with a […]</p>

Asian stocks are set to open lower following the downgrade of France’s credit rating over the weekend. Germany remains the only Euro country with a AAA rating after ratings agency S&P cut France and Austria of their top rating.

S&P cited insufficient policy steps being undertaken by leaders to combat the debt crisis.

France was quick to point out the downgrade was due to its exposure to problematic loans and not necessarily a strike against the overall French economy.

Either way, the Euro fell sharply on the news and was last trading at around 1.2646 against the US dollar. The Australian dollar, still AAA rated, also fell slightly but remains relatively stable against the US dollar at 1.0290.

The news will dominate the start of the Asian trading session. Germany’s Chancellor was quick to seize on the downgrade, saying Germany’s stance that other leaders must continue efforts to resolve the debt crisis is correct.

The French Prime Minister Francois Fillion said the market response in anticipation of the downgrade was muted. The news hit markets late in the US trading session which say the S&P500 fall by a modest 0.5% while the Dow Jones Industrial average shed 0.4%.

In regional political news, Taiwan’s President Ma Yin-jeou retained office after winning Saturday’s election, cruising to a comfortable victory that many expect to sooth Beijing’s concerns.

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