US markets were hit hard on Monday. All the major indices dropped by more than 2% as former President Trump's rhetoric ramped up yet again. In a scathing post, Trump referred to US Federal Reserve Chair Jerome Powell as “Mr. Too Late” and a “major loser,” warning that the economy would slow further if the US central bank failed to cut rates soon.
The sharp sell-off reflected growing market concern over the deteriorating relationship between the White House and the central bank. That said, futures point to a bounce in the early going, suggesting traders are prepared for volatility but not abandoning risk altogether.
Asian Pacific stock indices delivered a mixed performance overnight. Investors responded to Monday’s sharp decline across Wall Street with varying levels of concern.
Hong Kong’s Hang Seng and mainland China’s Shanghai Composite managed to post gains of 0.8% and 0.3% respectively, showing resilience despite global volatility and political tensions outside the US. Investors there appeared to take a more measured view of Trump’s latest comments, choosing instead to focus on a steadier domestic outlook and policy stability.
Australia’s ASX 200 and Japan’s Nikkei both closed modestly lower, unable to fully shake off the negative sentiment from the US session. The pressure on tech and the uncertainty surrounding US monetary policy were enough to weigh on regional sentiment, though the losses were contained.
European stock indices had a cautious start to the day. But they soon picked up and made significant gains across the board as US stock index futures recouped some of yesterday’s losses.
Traders had to digest the fallout from President Trump’s sharp criticism of the US Federal Reserve and the personal attack on Fed Chair Jerome Powell. They are now braced for more volatility ahead of earnings and central bank commentary. The move across global stock indices appears more reflective of consolidation than panic, but markets remain on edge.
Tesla will be in sharp focus after the bell today. The stock was down close to 6% in Monday’s session and is now off 40% for the year. Traders will be watching closely for any guidance or surprises that might stabilise sentiment around the EV giant.
This morning’s key earnings releases include GE, 3M, and Lockheed Martin, giving investors another glimpse into the health of industrials and defence.
In the FX market, the US dollar continues to come under heavy selling pressure. Yesterday, the Dollar Index fell to a fresh three-year low following Trump’s remarks about the Fed and amid speculation that the administration may be exploring options to replace Powell.
These headlines have rattled confidence in US monetary stability and accelerated selling across the board.
The Japanese yen made further gains. The USD/JPY traded at a fresh seven-month low, briefly dipping below the key 140 level before recovering. The EUR/USD climbed above 1.15 to trade at a three–and–a–half–year high, while the GBP/USD hovers around 1.3400, matching levels last seen in September. Both currencies continue to be buoyed by broad-based dollar weakness.
Gold surged more than 2% for a second straight session. It brushed briefly above $3,500 as investors continue to turn to it as a potential haven amid all the ongoing uncertainty. The latest move was driven by both Trump’s attacks on the Fed and the increasingly fragile outlook for the dollar. As sentiment sours, gold continues to shine as the financial refuge of choice.
Silver, however, remained unmoved, continuing to underperform magnificently. Often, silver can come from nowhere and play catch-up with its more significant partner. However, the fact that it is also a significant industrial metal may be a negative for many traders, as they assess the likelihood of a slowdown in global economic growth amid tariff uncertainty.
Crude oil was firmer in early trade this morning. Prices rebounded after a brief sell-off yesterday as investors rushed to derisk across the board. Crude continues to consolidate at higher levels following its bounce off the multi-year lows hit earlier this month.
Reports of positive progress in US-Iran talks added some optimism to the complex.
Natural Gas remained flat after slumping the previous day. It is now trying to hold the 3btu level.
Crypto also caught a bid, with Bitcoin eyeing the $90,000 level. The sector may benefit from being an alternative risk asset, especially with the Trump administration’s recent efforts to maintain a pro-crypto stance.
After spiking sharply on Monday, the VIX fell by nearly 3% and was back in the mid-27s as markets await key earnings and further Fed commentary. Volatility remains elevated, but the initial panic has subsided—for now.
It’s a quiet day on the economic calendar with no major data releases. Still, there will be plenty of Fed speak, which will likely take on even greater significance given the ongoing clash between Trump and Powell.
Meanwhile, the IMF meetings continue, with global policymakers expected to weigh in on trade tensions, fiscal strategy, and financial stability.
On the trade front, India and the US have expressed optimism over a potential deal, a small bright spot amid the broader backdrop of tariff uncertainty and geopolitical friction.
Equity markets were clearly rattled on Monday, trading on their own path and largely decoupled from broader global cues. The Trump-Powell conflict is quickly becoming the central risk factor for US assets, triggering yet another wobble in investor confidence.
The dollar remains under pressure, while gold continues its record run. This evening, Tesla will be the name to watch as it could set the tone for risk appetite heading further into the week.
The rebound in US stock index futures suggests a possible reset. However, with high volatility and central bank credibility in question, traders must remain alert to every headline.
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