Stock index futures got off to a shaky start on Monday in the aftermath of last week’s announcement of a downgrade in Spain’s credit rating.
On Friday, Fitch Ratings indicating that it had downgraded the credit rating of Spain’s Instituto de Credito Oficial from AAA to AA+. While not a dramatic cut in its own right, the announcement was unnerving to investors because it came on the heels of a downgrade of Spanish debt from Standard & Poor’s in late April.
Portugal and Greece have also seen credit downgrades in recent weeks due to concern about their unsustainable national deficits and their rising costs of borrowing – which could ultimately bring them closer than ever to defaulting on their debts.
On Monday, an Associated Press report noted that the euro had fallen to a four-year low, largely because of the news of the Spanish debt downgrade from Friday. The AP noted that the euro had slumped as low as $1.2112 before recovering somewhat.
The wire service added that investors have further reason to be concerned about a drop in China’s manufacturing growth.
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