South Korea’s Kospi hits new records

US stock index futures moved sharply lower overnight after news broke that the Department of Justice had opened a criminal investigation into Federal Reserve Chair Jerome Powell. Mr Powell confirmed the probe in a rare direct video statement.

Source: TN Trader

He also offered a strong response, saying the charges had nothing to do with building renovations and his testimony to Congress in June, and everything to do with the Fed’s independence when it came to setting interest rates, ‘... based on our best assessment of what will serve the public, rather than following the preferences of the President.’

The investigation has compounded an already tense standoff over central bank independence, coming at a time when the Fed is widely expected to pause further rate cuts after cutting rates three times in the latter part of 2025. President Trump has made clear he wants rates lower, adding political pressure as markets sit near record levels.

It also comes as President Trump prepares to announce his preferred candidate to replace Mr Powell as Fed Chair when the latter stands down in May. The VIX ticked higher as traders added downside protection, while Trump’s proposal to cap credit card rates at 10% for a year added another layer of uncertainty, particularly for banks.

Attention now turns to the start of the fourth quarter earnings season. JPMorgan, Bank of America, Wells Fargo, Morgan Stanley, Delta Air Lines, the Taiwan Semiconductor Manufacturing Company and Goldman Sachs are among the big-name stocks reporting this week. These should all help to provide some insight into consumer spending, trading activity and dealmaking as markets test whether fundamentals can justify current valuations.

The market will also digest the latest CPI and PPI inflation releases, which come out tomorrow and Wednesday, respectively. If these were to show signs of accelerating to the downside, investors are likely to price in further monetary easing from the Fed. The central bank has forecast just one 25 basis point rate cut this year, while the market currently expects two reductions.

European stock indices have largely shrugged off the weaker start across US stock index futures. The German DAX continued its bullish run, rallying to a fresh all-time high this morning and pushing further above the key 25,000 level, which it broke above last Wednesday.

Source: TN Trader

Other European indices, along with the UK’s FTSE 100, were modestly lower. Interestingly, investors have not rushed to cut their exposure to Europe in the wake of the US selloff. This seems to be a continuation of a trend that began to develop last year. 

Global investors, who have tended to shy away from European corporates in favour of big US tech, are increasingly drawn to the cheaper valuations and strong dividend plays found across Europe and the UK.

Despite this, markets remain sensitive to rising geopolitical risks, particularly the violent unrest building across Iran, while also wary of the Trump administration's next move.

The big news in Forex this morning is the sharp selloff in the US dollar. Investors rushed to cut their exposure to US assets in a move which also saw a drop in US Treasuries as yields pushed higher. The Dollar Index pulled back to 98.40 this morning, a level which has previously acted as resistance, and may now offer some support.

On Friday, it traded at its best level in four weeks as it approached 99.00. Investors were rattled by news that the US Justice Department was pursuing the Fed Chair Jerome Powell. The indictment alleges he lied to Congress back in June when testifying about renovation work being carried out on the Fed buildings.

The investigation into Mr Powell has raised concerns about the Fed’s autonomy, an unfavourable backdrop for the greenback. But investors were also rattled by the Fed Chair’s robust response, which accused the Trump administration of threatening the independence of the central bank.

Mr Powell pushed back against the investigation, describing it as political pressure tied to the Fed’s refusal to set rates according to presidential preferences.

Source: TN Trader

The Swiss franc emerged as the early outperformer. The USD/CHF broke a four-day winning streak as safe-haven demand picked up amid Iranian tensions and renewed talk of increased NATO presence in Greenland. Swiss inflation ticked up to 0.1% year-on-year in December, reinforcing expectations that the SNB will keep rates at 0% for now.

Gold extended its rally for a third straight session, and briefly broke above $4,600 an ounce, for the first time ever. Safe-haven demand remains strong as investors digest US intervention in Venezuela, escalating tensions across Iran, the Russia-Ukraine war, China-Japan frictions, and renewed rhetoric around Greenland. Concerns over Federal Reserve independence have also dragged the dollar away from recent highs, supporting flows into non-yielding assets.

Still, upside momentum may be tempered by Friday’s jobs data, which reduced expectations for aggressive Fed easing in 2026. With US inflation data due tomorrow and Wednesday, some traders appear hesitant to chase gold prices higher from current levels.

Source: TN Trader

Silver continued to outperform and was up over 5% earlier this morning. This took it to a fresh all-time high above $84.60 per ounce before it eased slightly. Silver’s gains continue to be outsized when compared to gold.

This is helped by fears that supplies are tight, especially considering silver’s numerous uses, industrially, medically and otherwise. But care must be taken if chasing prices higher, as the risks of a sharp correction only increase as silver makes fresh highs.

Source: TN Trader

Oil prices were initially firmer as the week began. But they subsequently pulled back from the four-week high hit overnight. Front-month WTI slipped back below $59 following a strong rally in the latter half of last week. This saw oil break out of a downward trending price channel, which has been building since oil dropped back from summer highs. Prices have not fallen back within the trend channel.

Source: TN Trader

So, it will be interesting to see if oil can continue to rally in a countertrend move or if sellers are able to drive prices lower once again. Supply concerns linked to Iran have driven recent moves. Protests are now in their third week, and President Trump has warned the regime against further crackdowns on demonstrators, hinting at possible US involvement.

Meanwhile, President Trump has said Venezuela could hand over up to 50 million barrels of sanctioned oil to the US. Traders are also watching developments in Russia, where ongoing Ukrainian attacks on energy infrastructure and potential new US sanctions add another layer of complexity.

Natural gas rallied sharply overnight as it made back a proportion of Friday’s losses. But sellers came back in to push prices down off their highs, although there’s some evidence that gas may be attempting to bottom.

The daily MACD is back in oversold territory, although it isn’t as oversold as it was back in April. Nevertheless, it has fallen a long way from last month’s highs and is overdue for a rebound. But prices may have further to fall first.

Both Bitcoin and Ether found a modest bid after overnight weakness, though prices remain well below recent highs. Volatility continues to define the space, with sentiment closely tied to broader risk appetite and equity market direction. But if both cryptos continue to consolidate, then this may attract some fresh buying.

Earnings season kicks off in earnest this week, led by Goldman Sachs and JPMorgan. Data is light early on, with CPI inflation tomorrow and Wednesday’s Retail Sales being the key releases to watch. Geopolitics remain front and centre, with Iran, Greenland and Venezuela dominating headlines.

Precious metals continue to respond aggressively to global political risks, while the dollar has retreated. Equity futures point lower, testing whether recent complacency is finally starting to crack. For now, investors remain cautious, with many wondering if markets have fully priced the risks ahead.