:00:00. > :00:00.the latest headlines from BBC News. Now for the latest financial news
:00:00. > :00:17.with Sally Bundock and World Business report.
:00:18. > :00:22.Volatility on the markets after Fitch threatens to strip America of
:00:23. > :00:27.its triple A credit rating over the debt deadlock. Yahoo reveals its
:00:28. > :00:37.still a struggle to boost its core online business. `` it is. But
:00:38. > :00:52.shares rise on a new deal struck with Alibaba. Welcome to World
:00:53. > :00:55.Business report. Will also be hearing from the leading bond
:00:56. > :00:58.manager to find out how markets are twisting and turning it this crisis
:00:59. > :01:05.in the US. Now to the latest on that. The US debt ceiling drama
:01:06. > :01:07.continues. Late last night one of America's leading credit agencies,
:01:08. > :01:09.Fitch, warned its reviewing the government's top credit rating
:01:10. > :01:12.following the failure of Washington to strike a deal on lifting the debt
:01:13. > :01:16.ceiling. The news broke after the close of trade on Wall Street but
:01:17. > :01:18.has caused markets in Asia to slump overnight, though they have
:01:19. > :01:22.recovered some ground in the last hour. Our correspondents in Hong
:01:23. > :01:29.Kong, India and London explain how their countries are being affected
:01:30. > :01:39.by what's going on in the US. Here in Hong Kong, investors are keenly
:01:40. > :01:49.watching the outcome. China is the biggest overseas holder of US debt.
:01:50. > :01:55.So a failure by the US politicians to come to an agreement could affect
:01:56. > :01:59.Chinese investments. As a result, Chinese officials have urged
:02:00. > :02:04.Washington to shelter is responsibility and take drastic
:02:05. > :02:10.measures to avoid a default. Here in India, the major worry is that the
:02:11. > :02:15.crisis could impact the rupee in a big way. It has been the worst
:02:16. > :02:23.performing currency in Asia this year, losing more than 25% between
:02:24. > :02:30.May and September. Isn't it Indian equity market is worried. Foreign
:02:31. > :02:39.investors hold a major chunk of stocks here ` more than $85 billion
:02:40. > :02:42.worth. If they pull out it could downgrade the markets. Here in
:02:43. > :02:51.London, the Bank of England has emergency plans in place, but won't
:02:52. > :03:00.give details. Investment funds have effectively led the US $157 billion.
:03:01. > :03:11.If their value fell, banks could be struggling to find solid assets. The
:03:12. > :03:17.price of those US loans also sets the cost of borrowing here. A rising
:03:18. > :03:24.rates could do a lot of damage. I am now joined by Stuart Cowley and
:03:25. > :03:32.David Keogh from Singapore. He is with the motley full. Stuart, in
:03:33. > :03:43.terms of the announcement late last night that it has put the US on
:03:44. > :03:54.negative watch, no surprise? `` Fool. Not really, this is just part
:03:55. > :04:05.of a long`term process in US credit rating in the markets. What impact
:04:06. > :04:08.is this having? So far, the interest rates are starting to rise along
:04:09. > :04:16.with the rising concern of investors. This is natural. In
:04:17. > :04:21.September last year, you were paying the US to look after your money at
:04:22. > :04:27.negative interest rates. Now they are paying you half a percent. It is
:04:28. > :04:38.not much, but is symbolic that as this crisis goes on, long`term
:04:39. > :04:42.interest rates will rise. David, part of your purpose is to make
:04:43. > :04:49.sense of financial markets for the ordinary investor. What are you
:04:50. > :04:54.telling people to do? We are asking people to stay calm. There are many
:04:55. > :05:00.fluctuations in the market. Just keep your nerve. As solution will be
:05:01. > :05:05.found. This is reflected by the Asian markets. They are
:05:06. > :05:11.flip`flopping, but there is an eerie calm. One American bank says it
:05:12. > :05:16.would much rather not take short`term treasuries. This is
:05:17. > :05:23.understandable. Banks are naturally cautious. They would rather take
:05:24. > :05:28.other collateral. But we are hoping things will sort themselves out. We
:05:29. > :05:35.still have another 24 hours. We are keeping our fingers crossed. But
:05:36. > :05:39.Stuart, in the meantime, the impact is being felt everywhere. Our Hong
:05:40. > :05:45.Kong correspondent was beating about the Chinese angle, given that they
:05:46. > :05:52.are huge investors in the US economy. They are furious. Even if
:05:53. > :05:58.the American striker deal today and avoid defaulting, we could be in
:05:59. > :06:04.this place in a few months again. Of course. This bullfrog in the
:06:05. > :06:13.background for it sometime. Its democracy with eight gun. Do as I
:06:14. > :06:19.say, or I will shoot myself. The Chinese have 1.5 tree of dollars of
:06:20. > :06:30.US securities. Their rhetoric is becoming more shrill. `` 1.5
:06:31. > :06:37.trillion. America plays up on this. But Chinese are livid. They called
:06:38. > :06:41.them hypocrites yesterday, that they should continue this process of not
:06:42. > :06:45.living within their means. When the Chinese try to control their
:06:46. > :06:55.currency, it means for them they have very few alternatives back to
:06:56. > :07:00.`` but to eye US Treasury bonds. David, obviously we pull revisit
:07:01. > :07:07.this situation next year. What impact will that have, the fact that
:07:08. > :07:13.we know this will roll on, the dispute based on political ideology?
:07:14. > :07:18.Political ideology is very interesting, because when political
:07:19. > :07:23.ideology comes in through the front door, common sense goes out the
:07:24. > :07:30.window. That is what we are seeing here. There is no common sense.
:07:31. > :07:37.Unfortunately, as far as America is concerned, they are living beyond
:07:38. > :07:40.their means. The debt price `` crisis will continue until they can
:07:41. > :07:51.come up with a budget without a deficit. Thank you, Stuart and
:07:52. > :07:56.David. Today is the day. The clock is ticking. We will keep you up to
:07:57. > :07:59.date as that they are aggressors. Staying with the US. Many of the
:08:00. > :08:05.biggest companies have started reporting their latest earnings.
:08:06. > :08:08.Internet giant Yahoo announced their results after markets closed Tuesday
:08:09. > :08:11.night. It said revenues fell 5% as online advertising continued to
:08:12. > :08:22.slip. Despite its poor performance Yahoo shares have enjoyed a huge
:08:23. > :08:28.jump since the new boss took office. This back in the 1990s, Yahoo! Was
:08:29. > :08:34.the dominant search engine. But since then, its market share has
:08:35. > :08:39.shrunk because of its rivals, Google and eating. Marissa Mayer was
:08:40. > :08:48.brought in from Google to turn the company around. `` being. Since she
:08:49. > :09:00.joined, she has made headlines, especially with a huge acquisition
:09:01. > :09:05.of up blog site. `` Bing. Yahoo! Is stock price has doubled since
:09:06. > :09:10.Marissa Mayer became the CEO. But why do investors love her so much
:09:11. > :09:18.when her core business has not performed well? The stock has been
:09:19. > :09:25.driven by Alibaba than anything Marissa Mayer has done. She has not
:09:26. > :09:35.done much. One major acquisition. She has changed a few things about
:09:36. > :09:39.the homepage, but nothing radical. Alibaba dominates the Chinese
:09:40. > :09:46.market. Its plan to go public is exciting Yahoo! Investors. Alibaba
:09:47. > :09:51.may have attempted tour of treasured shave for Yahoo!, but Marissa Mayer
:09:52. > :09:56.may look `` may need to look elsewhere to increase the fortunes
:09:57. > :10:06.of Yahoo!. Let's look at the markets. The picture is very mixed.
:10:07. > :10:16.Japan up, Hong Kong down, Shanghai down. Very mixed. The markets will
:10:17. > :10:22.remain very volatile, in and out of positive territory in both Asia and
:10:23. > :10:29.Europe as the day progresses. I don't need to explain why. We will
:10:30. > :10:32.see you soon. We will look through the newspapers in just a moment.