Asian stock markets declined Friday as sentiment was subdued after Standard & Poor's downgraded Spain's rating.

The Japanese benchmark Nikkei declined 0.43 percent or 40.94 points to 9,520.89 and Hong Kong's Hang Seng fell 0.33 percent or 68.26 points to 20,741.45, while the China Shanghai composite index declined 0.35 percent and the Indian Benchmark BSE Sensex slipped 0.28 percent.

Late Thursday, S&P downgraded its rating on Spain’s debt by two notches to BBB+ from A with a negative outlook, citing significant risks to Spanish economic growth and budgetary performance. S&P also lowered the short-term sovereign credit rating to ‘A-2′ from ‘A-1.′

“Europe isn’t getting any healthier, Samsung Asset Management Co.'s chief investment officer Pauline Dan told Bloomberg. Market volatility may increase in the short term if the situation in Europe remains unclear. Earnings may not be sustainable given that we’re seeing sub-par economic growth globally.”

Meanwhile, the Bank of Japan (BoJ) expanded its asset purchase program to 40 trillion yen ($494 billion) from 30 trillion yen in an attempt to achieve its 1 percent inflation goal. The current easing announcement is the second of its kind in just over two months. However, analysts say the second round of asset purchases is not likely to have much of an effect on either Japan’s currency or the economy.

“We would not get too excited nor would we anticipate a renewed trend of JPY weakness, Credit Agricole posted in a note. Unfortunately for the Japanese authorities, it is largely out of their power to engineer a lasting negative impact on the JPY unless they can push US Treasury yields sharply higher.”

In Japan, retailer shares were hurt despite a surprise 10.3 percent jump in retail sales. Family Mart plunged 2.47 percent and J Front Retailing declined 2.18 percent.

Shares of Nintendo Co. plunged 5.55 percent after posting its first annual loss in more than three decades. The company swung a net loss of 43.20 billion yen for the fiscal year ended March 31, compared to a net profit of 77.62 billion yen in the same period last year.

Samsung Electronics gained 2.54 percent after announcing better-than-expected first quarter earnings on higher Galaxy Smartphone sales.