Asia-Pacific markets fell Monday as investors assess the latest slate of economic data from China and Moody's downgrade of the U.S. credit rating.

Hong Kong's Hang Seng index declined 0.73%, while mainland China's CSI 300 dropped 0.48%.

Japan's benchmark Nikkei 22 slipped 0.54% while the Topix lost 0.36%. South Korea's Kospi declined 0.47% and the small-cap Kosdaq traded 0.77% lower.

Australia's benchmark S&P/ASX 200 was down 0.15%.
On Friday, Moody's Ratings downgraded the U.S. sovereign credit rating by one level from Aaa to Aa1, citing mounting challenges in funding the federal budget deficit and the increasing cost of refinancing debt in a high-interest-rate environment.

With this downgrade, Moody's has joined the ranks of other major rating agencies. S&P made the first move in 2011, and Fitch followed suit in 2023, both reducing the U.S. rating to AA+.

Moody's latest rating downgrade on its own may not cause a big sell-off in U.S. stock and bond markets as seen from the 2011 and 2023 rating downgrades, Vasu Menon, OCBC's managing director of the investment strategy team said in a note.

"It does however reinforce concerns about the growing U.S. budget deficit and debt, but these are not new and have been discussed extensively for the past few months, and even years," he noted.

U.S. stock futures declined after the S&P 500 posted a four-day rally on the back of U.S. and China's temporary tariff cuts and encouraging inflation
reports. Futures tied to the Dow Jones Industrial Average dropped 292 points, or 0.7%. S&P 500 futures slipped 0.7%, while Nasdaq 100 futures fell 0.8%.

Overnight stateside on Friday the three major averages closed mixed. The S&P 500 rose for a fifth session and posted a sharp weekly gain, as investors looked past the release of disappointing consumer sentiment data and persistent inflation worry.

The broad market index climbed 0.70% to end at 5,958.38, while the Nasdaq Composite gained 0.52% to close at 19,211.10. The Dow Jones Industrial Average gained 331.99 points, or 0.78%, settling at 42,654.74. Friday's advance put the 30-stock benchmark into positive territory for 2025.

Source: CNBC