Global Markets Decline Following Trump’s Fed Dismissal and Tariff Threats

Global stock markets experienced a downturn on Tuesday, following a series of unsettling announcements from US President Donald Trump. His decision to dismiss a Federal Reserve official, coupled with threats to impose new tariffs and export controls, has rattled investor confidence.

Traders had initially responded positively to remarks made by Jerome Powell, Chairman of the US Federal Reserve, during a speech on Friday that hinted at potential interest rate cuts. However, the optimism quickly faded as attention shifted to the upcoming earnings report from Nvidia, a key player in the technology sector, raising concerns about an emerging tech bubble.

Market Reactions Across Asia and Europe

In Asia, most markets registered moderate losses, mirroring declines from the previous day’s trading in New York and Europe. Hong Kong’s main index was notably affected, closing down 1.2 percent. Other significant losses were seen in Tokyo, Shanghai, Seoul, and Sydney, while Taipei managed a slight gain.

European markets opened with declines as well, particularly in London and Frankfurt. Paris faced a steep drop of over 2 percent, largely driven by fears of a political crisis in France ahead of a crucial confidence vote scheduled for next month.

A significant factor weighing on investor sentiment was Trump’s announcement regarding the removal of Federal Reserve governor Lisa Cook. Citing allegations of false statements related to her mortgage agreements, this unusual move raised concerns about the independence of the central bank, particularly given Trump’s repeated public calls for Powell to lower interest rates.

Following the announcement, the US dollar initially fell but later stabilized after Cook affirmed her intent to continue in her role. Meanwhile, gold prices rose, reflecting its status as a safe-haven asset during uncertain times.

Tariff Threats and Economic Indicators

Trump’s announcements included a vow to impose additional tariffs on countries that do not revoke digital taxes and regulations perceived as harmful to US technology. He also threatened to introduce export restrictions on “highly protected” US technology and chips, although he provided no specifics.

Looking ahead, market participants are focused on an upcoming US GDP report scheduled for Thursday and a key inflation gauge due on Friday. These indicators are expected to offer insights into future interest rate movements.

Oil prices saw a slight decrease on Tuesday, reversing recent gains amid speculation surrounding a potential peace deal to conclude the ongoing conflict in Ukraine.

Key market figures around 08:30 GMT included:

• Tokyo – Nikkei 225: Down 1.0 percent at 42,394.40
• Hong Kong – Hang Seng Index: Down 1.2 percent at 25,524.92
• Shanghai – Composite: Down 0.4 percent at 3,868.38
• London – FTSE 100: Down 0.6 percent at 9,263.86
• West Texas Intermediate: Down 0.9 percent at $64.19 per barrel
• Brent North Sea Crude: Down 0.8 percent at $68.25 per barrel
• New York – Dow: Down 0.8 percent at 45,282.47

As investors navigate this turbulent landscape, the implications of Trump’s announcements will continue to unfold, shaping market dynamics in the coming weeks.