President Trump’s repeated public criticisms of Federal Reserve Chair Jerome Powell, coupled with ongoing trade tensions, have rattled global markets, driving gold prices to a record high and causing fluctuations in equities
Global markets experienced significant volatility on Tuesday as US President Donald Trump intensified his attacks on Federal Reserve Chair Jerome Powell, raising concerns about the central bank’s independence. Gold prices soared to a record high, while the US dollar weakened, and equities fluctuated.
Also read: Trump set to unveil new tariffs on Canada, Mexico, China amid economic concerns
Trump’s repeated public criticisms of Powell, including calls for pre-emptive interest rate cuts and labeling him a “major loser,” have fueled fears that he may attempt to remove the Fed chair.
This follows Powell’s warnings about the inflationary impact of Trump’s tariff policies. Trump’s economic advisor, Kevin Hassett, further heightened these concerns by suggesting the president was considering his options for removing Powell.
The president’s actions led to a sell-off of US assets on Wall Street, with all three major indexes closing down by approximately 2.5% on Monday.
“The first volley on Thursday had little market reaction, but Monday’s second barrage has seen an intensification of the ‘sell America trade’,” noted National Australia Bank’s Tapas Strickland.
The heightened uncertainty drove investors towards safe-haven assets, pushing gold prices to a new record above $3,500. While the dollar stabilized after Monday’s decline, it remained under pressure against other major currencies.
Equity markets saw mixed results across Asia and Europe. Tokyo, Sydney, Seoul, Wellington, Taipei, Manila, and Bangkok experienced losses, while Hong Kong, Shanghai, Singapore, Mumbai, and Jakarta saw gains. London remained relatively flat, and Paris and Frankfurt saw slight declines.
Analysts warn that any attempt by Trump to remove Powell could trigger a severe market downturn. “Were Powell to be fired, the initial reaction would be a huge injection of volatility into financial markets, and the most dramatic rush to the exit from US assets that it is possible to imagine,” said Pepperstone strategist Michael Brown. He predicted sharp declines in equities, a sell-off of Treasuries, and a significant drop in the dollar.
Brown emphasized the potential for a global financial crisis, stating, “Any sign of the longstanding, independent nature of the Fed coming under threat would see investors across the globe selling every single US-based asset that they have, and also poses the genuinely scary prospect of upending the entire way in which the global financial system operates.”
Key Market Figures:
Tokyo (Nikkei 225): Down 0.2% at 34,220.60
Hong Kong (Hang Seng Index): Up 0.6% at 21,527.95
Shanghai (Composite): Up 0.3% at 3,299.76
London (FTSE 100): Flat at 8,275.99
Euro/Dollar: Down at $1.1500
Pound/Dollar: Up at $1.3389
Dollar/Yen: Down at 140.38 yen
West Texas Intermediate (WTI) Crude: Up 1.1% at $63.78 per barrel
Brent North Sea Crude: Up 1.0% at $66.95 per barrel
New York (Dow): Down 2.5% at 38,170.41
