Asian Markets Plunge Following S&P Debt Downgrade

In what may be a harbinger of stock behavior in Monday’s U.S. markets, equities in Asian plunged overnight, apparently in response to the decision by Standard & Poor’s to downgrade the long-term credit rating of the U.S. government to AA+ from AAA.

Japan’s Nikkei dropped 2.18 percent; The Hang Seng of Hong Kong slipped 2.17 percent and Singapore’s Straits Times tumbled 3.70 percent.

Moreover, China’s Shanghai composite slid 3.77 percent, while the KOSPI of South Korea plunged 3.82 percent.

At one time during the trading session, the Kospi index was down by as much as 7.4 percent – which led regulators to halt trading for five minutes.

Lee Jin-woo, an analyst at Mirae Asset Securities, told the Wall Street Journal: "The stock market seemed to be in a panic mode. No fundamental logic was behind the move."

However, after the trading halt, the Kospi bounced back finish well-above intraday lows.

Over the past five days, Kospi is down 14 percent.

Eiji Kinouchi, a chief strategist at Daiwa Securities Capital Markets, told Reuters: “The market may see a technical rebound in coming days but the direction of U.S. markets after the downgrade will likely dominate the mood,”

Also, in mid-day trading, European bourses are also in the red.

As of 8:20 a.m. (EDT), Britain’s FTSE-100 is down about 1.7 percent, Germany’s DAX has dropped 2.3 percent; and the CAC-40 of France has fallen 1.8 percent.