Asian equities declined overnight as risk aversion remains after the US rating downgrade.

Following overnight losses on Wall Street, most Asian markets declined on Thursday. Fitch's downgrading of the U.S. sovereign rating had a little negative impact on mood, and positive payrolls statistics had also fuelled worries about increasing interest rates.

This week, Fitch lowered the U.S. government's rating from AAA to AA+, citing worries about fiscal expenditures and escalating disputes between the Democrats and Republicans.

Even while experts lowered the downgrade's immediate effects, the decision nonetheless caused a wave of selling on stock markets throughout the world as investors locked in profits following a good run through June and July.

Stronger-than-expected U.S. private payrolls data released on Wednesday sent stocks tumbling, and markets braced for a similar reading from Friday's official nonfarm payrolls data by strengthening the currency and Treasury rates.

The Fed has greater room to raise interest rates as a result of the U.S. economy's resilience, especially in the labour market, which is bad news for risky stock markets.

In anticipation of Apple and Amazon's earnings announcements, tech shareholders were also apprehensive.

Asian markets fell as a whole. The Nikkei 225 index plummeted 1.6%, while the larger TOPIX sank 1.2%, making Japanese equities some of the worst performers for the day. A combination of profit-taking and a lack of clarity over the Bank of Japan's position on its ultra-dovish monetary policy hurt local stocks.

The ASX 200 index in Australia dropped 0.5% after statistics revealed that the nation's trade surplus remained stable in June. Additionally, second-quarter Australian retail sales decreased less than anticipated.

However, the Shanghai Shenzhen CSI 300 and Shanghai Composite indices in China decreased less than their counterparts overnight, as a private poll revealed that the country's services sector expanded more than anticipated in July.

(Sources: invesing.com, reuters.com)