China Stocks Fall With Aussie on Moody's Downgrade

China’s stocks declined after Moody’s Investors Service cut its rating on the country’s debt, saying the outlook for its financial strength will worsen. The Aussie dollar dropped.

The Shanghai Composite Index headed for the lowest closing level since October as Moody’s reduced its rating on China amid concerns over rising debt and slowing economic growth. Outside Chinese and Hong Kong markets, most Asian stocks were higher. British assets remain in focus in the wake of the suicide bombing in Manchester, as Prime Minister Theresa May warned that further attacks could be imminent. Oil extended a five-day surge.

The bleaker outlook on China comes after evidence this week in support of strengthening global growth as reports showed the German economy is firing on all cylinders and France’s is gathering momentum. Attention is also on the U.S., with the Federal Reserve due to release minutes from its most recent meeting, offering more clues on the pace of interest-rate increases.

Stock markets in the U.S. have recovered most of the value erased when the S&P 500 slumped on May 17 amid concern surrounding the prospects for President Donald Trump’s reform policies. Still, doubts about the pace of inflation have pushed Treasuries higher ahead of next month’s Fed decision.

Here are the main moves in markets:

Stocks

· The Shanghai Composite fell 0.5 percent as of 2:12 p.m. in Tokyo. The Hang Seng slipped 0.1 percent.

· Futures on the S&P 500 slid 0.1 percent. The underlying gauge rose 0.2 percent Tuesday, reaching as high as 2,400.85, two points from a closing record.

· Japan’s Topix index increased 0.5 percent. Australia’s S&P/ASX 200 Index rose 0.1 percent and South Korea’s Kospi index advanced 0.2 percent.

· Indonesia’s benchmark index slumped 0.9 percent.

Currencies

· The yen fell 0.1 percent to 111.87 per dollar. The Australian dollar fell 0.5 percent, snapping a three-day advance.

· The Bloomberg Dollar Spot Index rose 0.1 percent after climbing 0.3 percent Tuesday, recovering from a drop close to the lowest level since Nov. 4.

· The pound rose 0.1 percent to $1.2974, following a two-day loss.

Bonds

· The yield on 10-year Treasury notes held at 2.28 percent Wednesday. Bonds fell during the previous four days.

· Australian 10-year yields climbed three basis points to 2.48 percent.

Commodities

· Oil rose 0.2 percent to $51.55 a barrel, adding to a five-day advance.

· Gold was little changed at $1,251.97 an ounce, after dropping 0.8 percent on Tuesday.

· Copper fell 0.9 percent while iron ore futures dropped 4.7 percent, adding to a 3 percent drop in the previous session.

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