Asian markets sink; Dow futures drop 225 points today

Associated Press

BANGKOK

Asian stocks dropped sharply today as the first-ever downgrade of the U.S. government’s credit rating jolted the global financial system, reinforcing fears of a rapid slowdown in economic growth.

Oil prices extended recent sharp losses, trading below $85 a barrel on expectations that slower global growth will crimp demand for crude. The dollar was lower against the yen and the euro.

Among the major Asian markets, Hong Kong’s Hang Seng tumbled 4 percent to 20,109.49 and South Korea’s Kospi slid 3.3 percent to 1,879.93. Japan’s Nikkei 225 stock average was down 1.3 percent to 9,178.03 by its midday break.

Futures pointed to losses on Wall Street when it opens later this morning. Dow futures were off 225 points, or 2 percent, at 11,177 and broader S&P 500 futures shed 25.5 points, or 2.1 percent, to 1,172.42.

Standard & Poor’s downgrade of the U.S. sovereign credit rating to AA+ from the top-notch AAA, announced late Friday, was yet another blow to confidence in the struggling U.S. economy. It adds to growing fears that the world’s No. 1 economy may be headed back into recession.

Those anxieties have been compounded by signs that Europe’s government debt crisis is threatening to engulf bigger economies such as Italy and Spain.