Due to worries about slowing economy, Fitch reduced United States' top-tier sovereign rating. European stock markets open lower following losses in Asian Markets.

Due to worries about the slowing economy, Fitch reduced United States' top-tier sovereign rating. European stock markets open lower following losses in Asian Markets.

Late on Tuesday, Fitch lowered the country's rating from AAA to AA+, citing the likelihood of a fiscal downturn over the following three years and a history of tense debt ceiling talks that put the country's ability to pay its obligations in jeopardy.

The risk of a downgrade had been initially raised by the rating agency in May, thus this statement was rather unexpected considering that it had kept the same rating in June following the resolution of the U.S. debt limit issue.

Although the long-term effects of this decision are arguable, in the short term, U.S. bond yields dropped as investors, ironically, flocked to the security of U.S. government debt, while stocks declined in Asia and are probably going to do the same in Europe.

The announcement of discouraging industrial activity figures on Tuesday already had a negative impact on market confidence in Europe, indicating that the second half of the year would be a rough ride for the eurozone economy.

The final PMI for manufacturing in the eurozone dropped to 42.7 in July from 43.4 in June, which is the lowest reading since May 2020, indicating that this industry is still in a recession.

The economic calendar for Europe is pretty empty for today’s session.

After industry statistics showed a significant drop in U.S. stockpiles, which indicated strong demand from the world's largest fuel user, oil prices increased on Wednesday, nearly reaching their highest levels since April.

The API’s report revealed that U.S. oil stockpiles dropped by 15.4 million barrels in the week ending July 28, which was the biggest drop since records began being kept in 1982.

Later in this session, official statistics from the EIA are required for validation.

(Sources: investing.com, reuters.com)