Moody’s AAA rating downgrade dents U.S. stock markets, dollar, bonds

20 May 2025

NEW YORK, New York – U.S. stocks struggled on Monday as a further downgrading of U.S. debt by Moody’s sent the dollar sliding and Treasury yields higher. Moody’s cut its U.S. AAA rating to AA+ on Friday after markets had closed, the last rating agency to officially downgrade America’s coveted top rating.

“The Moody’s report didn’t highlight anything that every investor doesn’t already know about the U.S. fiscal situation,” Ross Mayfield, investment analyst at Baird told CNBC Monday. “To me, it just kind of provided a little bit of cover for the market to take a breather here, but nothing that structurally changes our bullishness on where we think we’ll be in the next six to 12 months,” he said.

U.S. Market Performance

  • S&P 500 (^GSPC): The broad-market benchmark inched up 5.22 points (0.09 percent) to close at a fresh record high of 5,963.60, supported by gains in technology and financial sectors. Trading volume reached 2.564 billion shares.

  • Dow Jones Industrial Average (^DJI): The blue-chip index rose 137.33 points (0.32 percent) to 42,792.07, marking its third straight session of gains. Volume stood at 534.152 million shares.

  • NASDAQ Composite (^IXIC): The tech-heavy index eked out a 4.36-point gain (0.02 percent), closing at 19,215.46, with trading volume hitting 12.179 billion shares.

Global Forex Markets Monday See Slide in U.S.  Dollar Against Major Currencies

The foreign exchange market saw varied performances among major currency pairs on Monday, with the US dollar gaining against some rivals while weakening against others amid shifting economic sentiment.

Key Currency Pair Movements

  • EUR/USD (Euro / US Dollar): The euro strengthened against the greenback, rising 0.66 percent to 1.1235, supported by improved risk appetite in European markets.

  • USD/JPY (US Dollar / Japanese Yen): The dollar slipped 0.48 percent against the yen, trading at 144.92, as traders weighed potential Bank of Japan policy adjustments.

  • USD/CAD (US Dollar / Canadian Dollar): The pair edged down slightly by 0.06 percent to 1.3957, as crude oil price stability lent some support to the Canadian dollar.

  • GBP/USD (British Pound / US Dollar): Sterling climbed 0.63 percent to 1.3353, buoyed by stronger-than-expected UK economic data.

  • USD/CHF (US Dollar / Swiss Franc): The dollar dipped 0.25 percent against the Swiss franc, settling at 0.8347, as the safe-haven franc found modest demand.

  • AUD/USD (Australian Dollar / US Dollar): The Aussie dollar surged 0.81 percent to 0.6452, benefiting from improved commodity prices and risk-on sentiment.

  • NZD/USD (New Zealand Dollar / US Dollar): The kiwi dollar also gained 0.80 percent, reaching 0.5921, following positive trade balance figures.

Market Drivers

The U.S. dollar was weaker Monday as traders assessed Federal Reserve rate cut expectations and global economic signals. Commodity-linked currencies, including the Australian and New Zealand dollars, outperformed amid rising raw material prices. Meanwhile, the yen saw gains as investors remained cautious ahead of key Japanese economic reports.

Outlook

Analysts suggest currency markets will remain sensitive to upcoming central bank commentary, particularly from the Fed and the European Central Bank. Geopolitical developments and economic data releases will also play a key role in shaping near-term forex trends.

Global Markets Show Mixed Performance as Key Indices Close with Varied Results

Global stock markets delivered a mixed performance on Monday, with some indices posting gains while others retreated amid varying economic signals.

Canadian Market Update

  • S&P/TSX Composite (^GSPTSE): Canada’s primary stock index advanced 74.43 points (0.29 percent) to 25,971.93, lifted by strength in energy and materials stocks. Trading volume was 253.502 million shares.

Europe

  • FTSE 100 (^FTSE): The UK’s benchmark index rose to 8,699.31, gaining 14.75 points, up 0.17 percent.

  • DAX (^GDAXI): In Germany the DAX climbed 167.55 points, or 0.70 percent, closing at 23,934.98.

  • CAC 40 (^FCHI): France’s CAC 40 dipped slightly, losing 3.06 points (0.04 percent) to settle at 7,883.63.

  • EURO STOXX 50 (^STOXX50E): The pan-European index edged down 0.30 points (0.01 percent) to 5,427.23.

  • Euronext 100 (^N100): The broader European index fell 3.73 points (0.23 percent) to 1,593.21.

  • BEL 20 (^BFX): Belgium’s index advanced 15.11 points (0.34 percent) to 4,462.46.

Asia-Pacific & Southeast Asia

  • Hang Seng (^HSI): Hong Kong’s index slipped 12.33 points (0.05 percent) to 23,332.72.

  • SSE Composite (000001.SS): China’s Shanghai index inched up 0.12 points (flat, 0.00 percent) to 3,367.58.

  • Nikkei 225 (^N225): Japan’s Nikkei fell 255.09 points (0.68 percent) to 37,498.63.

  • STI Index (^STI): Singapore’s Straits Times Index dropped 21.67 points (0.56 percent) to 3,876.20.

  • S&P/ASX 200 (^AXJO): Australia’s benchmark fell 48.60 points (0.58 percent) to 8,295.10.

  • All Ordinaries (^AORD): The broader Australian index declined 55.10 points (0.64 percent) to 8,524.80.

  • S&P BSE SENSEX (^BSESN): India’s Sensex lost 271.17 points (0.33 percent) to 82,059.42.

  • IDX Composite (^JKSE): Indonesia’s index gained 34.56 points (0.49 percent) to 7,141.09.

  • FTSE Bursa Malaysia KLCI (^KLSE): Malaysia’s index slid 15.61 points (0.99 percent) to 1,556.14.

  • S&P/NZX 50 (^NZ50): New Zealand’s index dropped sharply by 157.72 points (1.23 percent) to 12,629.07.

  • KOSPI (^KS11): South Korea’s benchmark fell 23.45 points (0.89 percent) to 2,603.42.

  • TWSE (^TWII): Taiwan’s index tumbled 319.86 points (1.46 percent) to 21,523.83.

Middle East & Africa

  • TA-125 (^TA125.TA): Israel’s index declined 11.13 points (0.41 percent) to 2,694.72.

  • EGX 30 (^CASE30): Egypt’s index dropped sharply by 357.90 points (1.13 percent) to 31,355.80.

  • Top 40 USD Net TRI (^JN0U.JO): South Africa’s index rose 6.85 points (0.14 percent) to 5,056.45.

Outlook

Investors remain cautious amid geopolitical tensions and shifting central bank policies. While European markets showed resilience, Asian indices faced pressure, particularly in Taiwan and New Zealand. Traders will be closely watching upcoming economic data for further direction.

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