Today’s stock market update: Asian markets took a downward turn following Wall Street’s lead, mainly due to Fitch Ratings downgrading the United States government’s credit rating

In Tokyo, the market benchmark saw a decline of nearly 1.5%, while Shanghai, Hong Kong, and Seoul also experienced drops. On a positive note, oil prices managed to inch higher.

The cause for this downturn can be traced back to Fitch Ratings' decision to lower the U.S. government's credit rating by one level. This move had a significant impact on Wall Street, resulting in the largest one-day decline in several months. The downgrade was attributed to the increasing debt and a perceived decline in governance standards, partly due to the recent tense situation in Congress regarding the debt ceiling.

Kristina Hooper from Invesco downplayed the immediate impact of this downgrade, mentioning that it brings the U.S. rating more in line with other major economies. She also noted the peculiar timing of the decision, coming after the debt ceiling issue had already been resolved.

As a result of these developments, the Nikkei 225 in Tokyo fell by 1.4% to 32,244.08, and the Shanghai Composite Index experienced a 0.2% dip to 3,254.37. Similarly, the Hang Seng in Hong Kong and the Kospi in Seoul both saw declines of 0.5% and 0.8%, respectively. Sydney's S&P-ASX 200 also dropped by 0.5%, while Jakarta managed to gain ground. However, markets in New Zealand and other parts of Southeast Asia faced declines.

Turning our attention to the U.S., the S&P 500 fell by 1.4% to 4,513.39 following Fitch's downgrade of the U.S. government debt rating from AAA to AA+. This marked the second consecutive loss for the benchmark index, which had reached a 16-month high just the previous week. The Dow Jones Industrial Average similarly dropped by 1% to 35,282.52, and the Nasdaq composite experienced a sharper decline of 2.2% to 13,973.45.

The significance of Fitch's downgrade lies in its impact on the global financial system, as U.S. Treasurys are widely considered among the safest investment options. The agency's decision was influenced by factors such as the recurring standoffs in Congress that have raised concerns about potential government defaults.

This isn't the first time the U.S. credit rating has been downgraded; it happened previously in 2011 when Standard & Poor's lowered the rating from AAA. A budget standoff that year was estimated to have increased borrowing costs by $1.3 billion.

Investors are keeping a close watch on whether the U.S. economy can avoid a recession, a concern that had been looming due to repeated interest rate hikes aimed at curbing inflation. Fortunately, recent optimism among traders contributed to a 19.5% increase in the S&P 500 during the first seven months of the year.

A report from payroll processor ADP highlighted stronger-than-expected hiring in the private sector, even though the pace slowed in July compared to the previous month. This robust hiring trend could help alleviate recession fears but might also prompt the Federal Reserve to address potential upward pressure on prices.

The U.S. jobs market will be further evaluated when the government releases a comprehensive report on Friday. The findings will play a significant role in influencing the Federal Reserve's next steps in September, as indicated by Fed Chair Jerome Powell.

In terms of specific companies, tech giants like Microsoft, Nvidia, and Amazon each saw drops of over 2.5%. Generac Holdings, a company specializing in generators and power products, experienced a substantial 24.4% decline – the largest drop in the S&P 500 – due to weaker-than-anticipated profits. Similarly, SolarEdge Technologies saw an 18.4% drop after reporting lower profit and revenue growth than expected, citing the pressure of higher interest rates on U.S. residential customers.

However, it's not all bad news on the corporate front. CVS Health saw a 3.3% rise as its results showed a milder drop than anticipated, and Humana experienced a 5.6% increase after exceeding expectations.

In the energy markets, U.S. crude oil prices inched up by 7 cents to $79.56 per barrel in electronic trading on the New York Mercantile Exchange, following a $1.88 fall the previous day. Brent crude, the benchmark for international oil trading, gained 8 cents to reach $83.28 per barrel in London, recovering slightly from a $1.71 loss in the previous session.

Lastly, the exchange rates remained relatively steady, with the dollar maintaining its position at 143.28 yen, and the euro slipping slightly from $1.0943 to $1.0934.