Asia-Pacific markets set to trade mixed as investors parse Moody's U.S. downgrade

Asia-Pacific markets are set to trade mixed Monday as investors await a slew of economic data from across the region and parse Moody's downgrade of the U.S. credit rating.

Japan's benchmark Nikkei 225 is set to open mixed, with the futures contract in Chicago at 37,730 while its counterpart in Osaka last traded at 37,800, against the index's last close of 37,753.72.

Australia's benchmark S&P/ASX 200 is set to rise marginally, with futures standing at 8,360, higher than the index's last close of 8,343.7.

Futures for Hong Kong's Hang Seng index stood at 23,270, lower than its last close of 23,345.05.

China is scheduled to release a slate of economic data for April, including housing prices and industrial production.

Thailand is set to report its first-quarter GDP later in the day. The Reserve Bank of Australia will also kickstart its two-day meeting.

On Friday, Moody's Ratings downgraded the U.S. sovereign credit rating by one level from Aaa to Aa1, citing mounting challenges in funding the federal budget deficit and the increasing cost of refinancing debt in a high-interest-rate environment.

With this downgrade, Moody's has joined the ranks of other major rating agencies. S&P made the first move in 2011, and Fitch followed suit in 2023, both reducing the U.S. rating to AA+.

Moody's latest rating downgrade on its own may not cause a big sell-off in U.S. stock and bond markets as seen from the 2011 and 2023 rating downgrades, Vasu Menon, OCBC's managing director of the investment strategy team said in a note.

"It does however reinforce concerns about the growing U.S. budget deficit and debt, but these are not new and have been discussed extensively for the past few months, and even years," he noted.

U.S. stock futures declined after the S&P 500 posted a four-day rally on the back of U.S. and China's temporary tariff cuts and encouraging inflation reports. Futures tied to the Dow Jones Industrial Average dropped 292 points points, or 0.7%. S&P 500 futures slipped 0.7%, while Nasdaq 100 futures fell 0.8%.

Overnight stateside on Friday the three major averages closed mixed. The S&P 500 rose for a fifth session and posted a sharp weekly gain, as investors looked past the release of disappointing consumer sentiment data and persisting inflation worry.

The broad market index climbed 0.70% to end at 5,958.38, while the Nasdaq Composite gained 0.52% to close at 19,211.10. The Dow Jones Industrial Average gained 331.99 points, or 0.78%, settling at 42,654.74. Friday's advance put the 30-stock benchmark into positive territory for 2025.

— CNBC's Brian Evans, Pia Singh and Tanaya Macheel contributed to this report.