Moody's Investors Service said Monday that in spite of rising debts and the tough choices it faces moving forward, the British government will retain its Aaa rating for the foreseeable future. The analysis assumes that the U.K. economy will grow at a modest but sustainable pace, while the financial center will be restructured without significant pain.
"Nevertheless, Moody's believes that the UK has the wherewithal and ability to meet these challenges whilst maintaining its Aaa rating," said Ken Orchard, Moody's lead UK analyst, in a press release.
The news boosted stock index futures on both sides of the Atlantic; given the high debt burdens of most of the world's developed economies, investors often breathe a sigh of relief when rating agencies maintain their positive ratings on the governments. A downgrade can cause of crisis of confidence that can lead to a vicious spiral of rising borrowing costs.
At 9:00 a.m. EST, Dow Jones Industrial Average index futures were up 24 points to 10,562, while Nasdaq 100 futures rose 5.25 points to 1,958. S&P 500 index futures gained 4.2 points to 1,123.2.
Across the Atlantic, FTSE 100 index futures jumped 49.5 points to 5,541.50, while DJ Euro Stoxx 50 index futures rose a modest 11 points to 2,756.
Asian equities were less positive, with Nikkei 225 index futures slipping 50 points to 9,520, while Hong Kong's Hang Seng index futures dropped 37 points to 1,961.
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