(Alliance News) - Stocks in London are set to open lower on Wednesday, as Asian equities trade in the red following Fitch's credit downgrade for the world's largest economy.

IG says futures indicate the FTSE 100 to open down 0.5%, or 41.17, at 7,625.10 on Wednesday. The index of London large-caps closed down 33.14 points, 0.4%, at 7,666.27 on Tuesday.

Fitch downgraded the US' top-notch credit rating by a step on Tuesday, citing a growing federal debt burden and an "erosion of governance" that has manifested in debt limit standoffs.

The decision to downgrade the US from AAA to AA+ sparked a fiery rebuttal from the White House, with press secretary Karine Jean-Pierre saying the move "defies reality." Treasury Secretary Janet Yellen said in a separate statement that she "strongly" disagreed with Fitch as well, calling the change "arbitrary and based on outdated data."

It is the first such downgrade by a major ratings company in more than a decade. A debt ceiling impasse in 2011 saw S&P lower Washington's AAA rating, drawing bipartisan outrage.

In Asia on Wednesday, the Nikkei 225 index in Tokyo was down 2.4%. In China, the Shanghai Composite was down 0.8%, while the Hang Seng index in Hong Kong was down 2.0%. The S&P/ASX 200 in Sydney was down 1.3%.

Also in the US, Donald Trump was indicted over his efforts to upend the results of the 2020 US election – the most serious legal threat yet to the former president as he campaigns to return to the White House.

It is the third criminal indictment of the 77-year-old Trump since March and charges him with three counts of conspiracy and one count of obstruction.

Wall Street ended mixed on Tuesday. The Dow Jones Industrial Average closed up 0.2% whilst the S&P 500 ended down 0.3%, and the Nasdaq Composite fell 0.4%

Sterling was quoted at USD1.2780 early Wednesday, higher than USD1.2742 at the London equities close on Tuesday. The euro traded at USD1.0996 early Wednesday, higher than USD1.0961 late Tuesday. Against the yen, the dollar was quoted at JPY142.85, down versus JPY143.41.

Gold was quoted at USD1,949.40 an ounce early Wednesday, higher than USD1,942.88 on Tuesday. Brent oil was trading at USD85.73 a barrel early Wednesday, higher than USD84.79 late Tuesday.

Wednesday's economic calendar has the US ADP jobs report at 1315 BST.

The local corporate diary has half-year results from defence firm BAE Systems, packaging company Smurfit Kappa and insurer Direct Line.

By Sophie Rose, Alliance News reporter

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