Downgrade Will Impact Financial Market

Financial markets will react to decision by Standard & Poor’s to downgrade the US credit rating. Based on the previous experiences we can expect a financial impact. The markets are reacting to a lot of factors and considering S & P also in it. The decision will create concern among the investors that global economic growth may slow down further.

S & P said with the downgrade statement that the US political system failed to adequately address deficit reduction in the compromise law that President Barak Obama signed on 04^th August 2011 to avert a US default on its debt.

Though there are questions about the credibility and integrity of S & P’s ratings there is no misrepresentation about the downgrade and is a justified one. The US debt burden will rise most likely over the next decade. World equities face more turmoil after S & P decision which is worse than global financial crisis since 2008 on fears of euro zone debt.

Stock markets across Middle East fell down as investors started to sell-off the global equities after the United States of America's Standard & Poor cut down its prestigious AAA credit rating.

Capital economic analysts suggest that the financial market will continue to have impact due to the US debt fear and the risks of recession will rise further.