Stock markets drop after US credit rating downgraded by Moody’s – business live

Rolling coverage of the latest economic and financial newsUS credit rating downgrade could add to pressure on government debtDrinks giant Diageo has predicted it faces a $150m per year hit from Donald Trump’s tariffs, at their current level.In a statement to the City, Diageo – whose brands include Smirnoff vodka, Johnnie Walker whiskey and Astral Tequila, says:Assuming the current 10% tariff remains on both UK and European imports into the US, that Mexican and Canadian spirits imports into the US remain exempt under USMCA, and that there are no other changes to tariffs, the unmitigated impact of these tariffs is estimated to be c.$150m on an annualised basis.Tariffs between the US and China do not have a material impact on our business. We expect that given the actions that we have in place already, before any pricing, we will be able to mitigate around half of this impact on operating profit on an ongoing basis.For one, Moody’s was already above its peers from S&P and Fitch and the rating downgrade brings it in line with the other rating agencies.Second, the move was not totally unexpected. We have been in the camp that we need to price in a higher risk premium for the US long end [ie longer-dated bonds]. Continue reading...

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