Asian stock markets edged lower at Thursday’s open, snapping a multi-day winning streak as investor anxieties flared following pointed criticism of Federal Reserve Chair Jerome Powell by President Donald Trump, which ignited concerns over the central bank’s independence and triggered a sell-off in US assets overnight.
Trump’s Fed criticism roils sentiment
A regional equity gauge declined for the first time in four days, with Hong Kong markets poised for a weaker return after the Easter holidays.
While US equity futures showed some stabilization in early Asian trading, extending a modest rally from late Monday, the underlying nervousness lingered.
The core issue stems from President Trump intensifying his public attacks on Powell for not cutting interest rates more aggressively.
Trump’s assurances that tariff negotiations were progressing offered little comfort as speculation mounted that he might seek to remove the Fed Chair.
The mood on Wall Street noticeably soured, shifting from cautious optimism towards what some analysts termed a ‘Sell America’ sentiment.
This reflects growing unease over Trump’s disruption of the global trade order through aggressive tariff hikes – measures economists widely warn could fuel inflation and tip the US economy into recession.
“The crisis of confidence in US markets is deepening as Trump’s policies shake up, possibly break, the global economic order,” wrote Kyle Rodda, senior market analyst at Capital.com, capturing the prevailing apprehension.
Fed independence under scrutiny
President Trump took to his Truth Social platform on Monday, dialing up the pressure on Powell, insisting there was “virtually” no inflation and advocating for “preemptive cuts”.
This assertion contradicts the Fed’s own preferred inflation gauge, which remains above the central bank’s target (with a fresh reading due next week).
Adding fuel to the fire, National Economic Council Director Kevin Hassett confirmed on Friday that Trump is exploring the legality of firing Powell.
These developments have cast a significant shadow over the Federal Reserve’s long-held operational independence, a cornerstone of US economic stability.
Market strategists warned of severe consequences should Trump act against Powell.
“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,” Michael Brown, senior research strategist at Pepperstone, told Bloomberg.
He added, “Not only is the independence of the Fed clearly under threat, but the prospect of de-dollarization and a move away from US hegemony is an increasingly realistic one.”
This political pressure is forcing a reassessment of assets typically seen as fundamental pillars of US economic strength.
The US dollar and Treasury bonds, usually safe havens during market stress, appear less attractive under these circumstances.
Echoing these concerns, prominent hedge fund manager Paul Singer, founder of Elliott Investment Management, recently warned at a private event about the potential for the dollar to lose its global reserve currency status, according to attendees.
Dollar stabilizes, BoJ holds steady
In currency markets, a gauge of the dollar showed signs of rebounding after plumbing a 15-month low earlier, suggesting some tentative stabilization.
Yields on 10-year US Treasuries also edged slightly higher (yields down slightly).
Meanwhile, officials at the Bank of Japan reportedly see little immediate need to alter their cautious policy of gradually normalizing interest rates, despite the uncertainties created by US tariff actions, according to sources familiar with their thinking.
Elsewhere, safe-haven gold touched another record high, while oil prices continued their upward climb.
Market Snapshot (as of 9:50 a.m. Tokyo time unless stated):
Stocks:
- S&P 500 futures: +0.4%
- Hang Seng futures: Unchanged
- Japan’s Topix: -0.2%
- Australia’s S&P/ASX 200: -0.6%
- Euro Stoxx 50 futures: -0.7%
Currencies:
- Bloomberg Dollar Spot Index: +0.2%
- Euro: -0.3% to $1.1486
- Japanese Yen: -0.2% to 141.09 per dollar
- Offshore Yuan: Little changed at 7.2985 per dollar
Cryptocurrencies:
- Bitcoin: +0.1% to $87,445.12
- Ether: -0.9% to $1,563.33
Bonds:
- 10-year Treasury yield: -1 basis point to 4.40%
- Australia’s 10-year yield: -1 basis point to 4.27%
Commodities:
- WTI Crude: +0.8% to $63.59 a barrel
- Spot Gold: Little changed (near record highs)
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