Sept 20 (Reuters) – Standard and Poor's downgraded its unsolicited ratings on Italy by one notch to A/A-1 and kept its outlook on negative, a major surprise that threatens to add to concerns of contagion in the debt-stressed euro zone.
The single currency skidded over half a cent to $1.3606 after S&P said the cut reflected its view of Italy's weakening economic growth prospects.
Italy's fragile governing coalition and policy differences within parliament will likely limit the government's ability to respond decisively to the challenging domestic and external macroeconomic environment, the agency said.
"In our opinion, the measures included in and the implementation timeline of Italy's National Reform Plan will likely do little to boost Italy's economic performance, particularly against the backdrop of tightening financial conditions and the government's fiscal austerity program," said S&P.
The move from S&P came as a surprise as the market had thought Moody's was more likely to downgrade Italy first. Moody's last week said it would take another month to decide on its action.
The downgrade came as Greece struggles to meet demands from lenders for yet more austerity measures.
"It's just more of the same negative news," said Stephen Roberts, a senior economist at Nomura in Sydney.
"It only adds to the contagion risk over Greece and has encouraged the flight to safety in markets here," he added, pointing to a sharp fall in the Australian dollar on the news.
S&P 500 futures SPc1 also dropped 0.7 percent and early hopes for a bounce in Asian shares on Tuesday looked to be still-born now.
European stocks had already slid on Monday, while yields on Italian and Spanish bonds rose sharply on fears of a Greek default, compounded by the failure of EU finance ministers to agree new steps to resolve Europe's debt crisis at weekend talks.
PRAISE FOR JERRY 'S BOOK "Jerry Robinson does an excellent job of explaining the 'Petrodollar' system. His book explains exactly how this will come about, but equally important is the comprehensive section on what you can do to protect yourself."
(Recorded on 10/19/21) Topics covered on this video coaching call On this week’s live coaching call, we are joined by financial advisor Mike Mitchell to discuss a powerful macroeconomic planning process that can help you create measurable financial strategies to...
Segment 1: Beware of the Pitfalls SEGMENT BEGINS AT 00:39 Over the years, investor/trading coach Jerry Robinson has encountered several pitfalls that have interfered with achieving financial success. Today he shares five of these pitfalls that may not be readily...
(Recorded on 10/12/21) Topics covered on this video coaching call On this week’s live coaching call, trading coach Jerry Robinson delivers a wide-ranging investing update along with an in-depth Q&A session. Included in this video: – Coming soon: Lunch &...