Global markets fell on Tuesday following a series of disruptive announcements by US President Donald Trump. These included the firing of a central bank official and threats of new export controls and tariffs.
Traders had been optimistic since US Federal Reserve Chairman Jerome Powell’s Friday speech hinted at potential interest rate cuts in the US economy.
However, Wall Street’s gains stalled on Monday, with focus shifting to AI chip leader Nvidia’s earnings report amid growing concerns over a tech bubble.
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Asian markets saw moderate declines on Tuesday, reflecting drops from New York and Europe.
Hong Kong’s main index fell sharply, closing 1.2% lower.
Indices in Tokyo, Shanghai, Seoul, and Sydney also fell, while Taipei edged up slightly.
Morning trading in Europe showed declines in London and Frankfurt, with Paris dropping over 2% amid fears of a French political crisis ahead of a critical confidence vote.
Investors were also concerned after Trump announced the removal of Federal Reserve governor Lisa Cook on Monday, citing alleged false statements on her mortgages.
This unprecedented move, likely to face legal challenges, raises concerns about the central bank’s independence, as Trump has repeatedly pressured Powell for lower interest rates.
The dollar dipped after the news but mostly recovered following Cook’s statement affirming her continued role.
Gold, seen as a safe haven, rose in value.
“Trump’s announcement highlights the central bank’s growing politicization,” noted Neil Wilson, UK investor strategist at Saxo Markets.
“Markets are now focused on the September Fed meeting, marking a significant regime shift,” he added.
Trump also threatened substantial new tariffs on countries imposing digital taxes harmful to US tech and hinted at export restrictions on US technology and chips.
Attention is now on the US GDP report on Thursday and a crucial inflation measure on Friday for clues on future interest rate changes.
Oil prices dipped on Tuesday, reversing recent gains amid peace deal speculation in Ukraine.
Key figures around 0830 GMT
Tokyo – Nikkei 225: DOWN 1.0% at 42,394.40 (close)
Hong Kong – Hang Seng Index: DOWN 1.2% at 25,524.92 (close)
Shanghai – Composite: DOWN 0.4% at 3,868.38 (close)
London – FTSE 100: DOWN 0.6% at 9,263.86
Euro/dollar: DOWN at $1.1617 from $1.1624 on Monday
Pound/dollar: UP at $1.3467 from $1.3460
Dollar/yen: DOWN at 147.56 yen from 147.70 yen
Euro/pound: DOWN at 86.26 pence from 86.35 pence
West Texas Intermediate: DOWN 0.9% at $64.19 per barrel
Brent North Sea Crude: DOWN 0.8% at $68.25 per barrel
New York – Dow: DOWN 0.8% at 45,282.47 (close)
