Asian equities capitulate on Italy rating downgrade

Asian stock markets once again capitulated to the mounting pressure evident in overnight US and European markets as sentiments got pummeled after Standard & Poor’s downgraded Italy’s credit rating to A from A+ with a negative outlook, exacerbated concerns that Europe’s debt crisis is spreading. Investors also continued to trim down hefty positions as they feared that Greece won't be able to convince international lenders that it can pay its debts - and that it won't get the money it needs to avoid a default that must be paid next month. Furthermore, Barack Obama's $3.6 trillion deficit reduction plan, which the White House stated would allow the country to start reducing its debt level by 2017, provided little support to global sentiments.

The benchmark in Japan, after an extended weekend, was trading with large cuts of around on and half a percent, being the top laggard in the space, amid weak global cues and mounting worries about the global turmoil. But equity indices in China, and South Korea are not witnessing heavy sell-off and are trading with moderate loses.

Shanghai Composite declined 8.68 points or 0.36% to 2,429.11, Hang Seng plunged 142.00 points or 0.75% to 18,775.95, Jakarta Composite sank 41.03 points or 1.09% to 3,714.02, KLSE Composite shaved off 6.17 points or 0.44% to 1,406.95, Nikkei 225 plummeted 124.42 points or 1.40% to 8,739.74, Straits Times slipped 6.02 points or 0.22% to 2,751.21, Seoul Composite dipped 5.02 points or 0.28% to 1,815.92 and Taiwan Weighted slumped 56.62 points or 0.76% to 7,424.26.