Moody’s bond rating agency cut China’s sovereign credit rating, saying the country’s financial strength will worsen in the coming years as its debt rises and the economy slows.

The move did little to halt rising stock markets in Asia, as both Chinese exchanges closed positive after the surprise cut.

The question is will China retaliate by slashing America’s rating as it has done in the past.

Moody’s downgraded China’s rating to A1 from Aa3. Moody’s last cut its China credit rating in November 1989, soon after the bloody crackdown on mass protests in Beijing’s Tiananmen Square rocked the nation. China’s credit rating is now the same as  Japan, Saudi Arabia and Israel.

Meanwhile later Wednesday the Federal Reserve’s May meeting minutes will be released at 2pm. Analysts say the message will confirm a June rate rise.

As I have said many times, there will be only the one rate rise this year. The minutes will  point to a slowing in inflation rate, which will put any rate rise on the back burner.