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NEW YORK (CNNMoney) -- World markets sold off Friday, after Moody's downgraded 15 major banks and a worse-than-expected report on German confidence.
After the close U.S. trading Thursday, Moody's Investors Service downgraded 15 banks, including giants like Bank of America (BAC, Fortune 500), Goldman Sachs (GS, Fortune 500) and JPMorgan (JPM, Fortune 500).
That weighed on European and Asian markets, which were closed when the downgrades were announced. Another day of weak data from Germany added to the pessimism.
"The German Ifo data was pretty soft, a two-year low," said Kathy Jones, fixed income strategist for Charles Schwab. "Now the recession is spreading to all the countries through out the Europe."
The closely-watched Ifo Business Climate Index for industry and trade in Germany fell to its lowest level since March 2010, and companies had "far lower" expectations for the next six months.
That came a day after a purchasing managers report showed conditions deteriorating for the second straight month in Germany.
Germany, a bastion of economic strength amid its mostly stagnant European neighbors, sends 60% of its exports to other European Union members and it is now feeling the impact from the surrounding malaise, Jones said.
"If you're going to have that much of a downturn in Europe, it's going to be felt in Germany, as well," she said.
The recession is certainly being felt in Spain, where the banking industry needs a cash injection of € 62 billion just to stay afloat, according to an independent audit published Thursday. After selling off Thursday, U.S.-listed shares of Banco Santander (SAN) and BBVA (BBVA) rebounded early Friday.
Spanish debt is also still expensive, with the average yield for the 10-year Spanish bond trading at 6.48%.
The Hang Seng (HSI) in Hong Kong and the Shanghai Composite (SHCOMP) both closed lower by 1.4% and Tokyo's Nikkei 225 (N225) was down 0.3% at the close of trading.
London's FTSE 100 (UKX) fell 0.8%, the CAC 40 (CAC40) fell 0.5% and the DAX (DAX) in Frankfurt fell 0.6% in midday trading. The Euronext (N100) index slipped 0.5%.
But Wall Street was setting itself up for a rebound, after getting Thursday's nasty session out of its system. S&P 500 (SPX), Nasdaq (COMP) and Dow Jones industrial average (INDU) futures were all up 0.4% ahead of the opening bell.
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