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Fitch threatens to downgrade UK’s AAA rating

The ratings agency Fitch joined its peer Moody’s in placing the UK’s AAA credit rating on “negative outlook” earlier today. The designation meant that there was a slightly higher than 50% chance of a downgrade within the next two years, citing a limited capacity to deal with further economic shocks despite recognising the country’s commitment to deficit reduction and a “diverse and flexible economy”. It comes just a week ahead of the Chancellor of the Exchequer George Osborne’s Budget announcement.

Markets opened relatively flat although once again lost ground towards the end of the day, moving further from the 8 month highs they had reached earlier in the week. Sentiment was supported by a Spanish debt auction, in which €3billion worth of 3 year debt was issued at an average yield of 3.374%, from 3.748% during the last auction in January. It follows a similarly successful Italian debt auction yesterday, and was largely regarded as the country’s first test following the loosening of Spain’s 2012 budget deficit by Mario Rajoy’s.

Tesco lost ground after the CEO of its UK business Richard Brasher said it was quitting, evidently causing some questions following its recent profit warning following a weak Christmas period.

Oil prices lurched lower in response to news that Britain and the US will cooperate in a bilateral agreement to release strategic oil stocks. The news came amid the British Prime Minister’s visit to America.

Us Markets were up around 0.5%, with the US S&P 500 index breaking through a key 1400 level at the time of writing, the highest since June 5th 2008. Falling unemployment claims helped sentiment across the Atlantic, with the S&P led higher by Apple, a company that has performed strongly in recent weeks, with the stock price now up to more than $600. The UK finished down 0.1% at 5940.7, underperforming its European peers that were buoyed towards the end of trade following US indices (French CAC up nearly 0.5% and the DAX up almost 1%).

This was posted in Bdaily's Members' News section by James .