“I think this is significant, and it will lead to a lower US dollar, currency appreciation pretty much around the world – and that’s obviously going to weigh on global risk markets,” Sherwood said.

AMP deputy chief economist Diana Mousina said the Fitch downgrade was not a complete shock, but it could add to concerns about the risk of US recession caused by the rapid rise in interest rates. She said there was also a risk US shares – which have surged this year, driven by tech stocks – had rallied too far.

“There’s an increasing risk that shares have gone too far and there’s a pull-back, and the credit rating downgrade could add to further nervousness,” Mousina said.

Mousina said that, for most countries, a credit rating downgrade would lead to higher borrowing costs for the government, which could feed into higher corporate debt costs as well. The US is different because it issues the world’s reserve currency and its bonds tend to be sought-after in times of stress, she said.

“Even though it’s got a lower credit rating, it’s still liquid, and it can still issue bonds. There’s no risk that the government cannot be funded,” Mousina said.

Currency strategist at foreign exchange provider Corpay Peter Dragicevich said the downgrade had probably compounded pressure on the Aussie dollar after Tuesday’s Reserve Bank decision to keep the cash rate on hold.

But he said the move would not change investors’ attitudes to holding US government bonds, as mandates that required some investors to hold AAA assets were loosened after S&P’s downgrade in 2011.

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”It’s still the reserve currency; it’s still the most liquid and deepest bond market there is – that’s not going to change,” Dragicevich said.

GSFM investment strategist Stephen Miller did not think the downgrade would have a major bearing on markets but he said it was a reminder that politicians were not working effectively, and this idea was relevant outside the US as well.