Asian stock markets tumbled on Tuesday as investors digested a series of dramatic moves by US President Donald Trump, including the unprecedented removal of a Federal Reserve governor and fresh threats of trade tariffs and technology export restrictions. The developments unsettled global markets, erasing optimism that had built up just days earlier following signals of possible US interest rate cuts.
The sudden dismissal of Fed governor Lisa Cook late Monday sparked immediate concerns over the independence of the US central bank. Trump claimed Cook had made false statements on mortgage documents, a justification that analysts believe will almost certainly face legal challenges. The dollar briefly weakened after the announcement before rebounding when Cook issued a statement insisting she would continue in her role. Gold, widely seen as a safe haven in times of uncertainty, gained ground as investors sought security.
Equity markets across Asia followed Wall Street’s lead after Monday’s losses. Tokyo’s Nikkei slid one percent, Hong Kong, Shanghai, Seoul, and Sydney also ended in negative territory, while Taipei managed a slight increase. Early trading in Europe also opened lower, with London, Paris, and Frankfurt all slipping into the red.
Just days earlier, investors had cheered comments from Federal Reserve Chairman Jerome Powell, who hinted at the likelihood of rate cuts, sending a wave of optimism through markets. That enthusiasm quickly evaporated as attention turned to Nvidia’s upcoming earnings report, a critical test for the artificial intelligence chip sector at a time when fears of a tech bubble are mounting.
Trump’s trade stance added to the jitters. On Monday evening he pledged to impose “substantial additional tariffs” on countries that continue to enforce digital taxes and regulations he argued were deliberately harmful to US technology firms. He went further, warning that new export restrictions could soon be placed on what he described as “highly protected US technology and chips,” although no further details were given.
Analysts warned that Trump’s actions could deepen market instability. “The independence of the Fed, already under strain, now appears shredded by politics,” said Stephen Innes of SPI Asset Management. “What remains is a central bank missing one vote, an inflation test due Friday, and a president reshaping policy like a ringmaster cracking his whip.”
Attention is now shifting to key US economic data expected later in the week. A GDP report scheduled for Thursday and an inflation gauge on Friday are likely to provide crucial clues on the Federal Reserve’s next policy steps and the scale of potential rate cuts in the months ahead.
Meanwhile, oil prices slipped after recent gains, pressured by speculation that progress could be made toward a peace agreement to end the war in Ukraine. At around 0715 GMT, Tokyo’s Nikkei 225 had dropped 1.0 percent to 42,394.40, Hong Kong’s Hang Seng was down 0.8 percent at 25,621.83, and Shanghai’s Composite closed 0.4 percent lower at 3,868.38. London’s FTSE 100 fell 0.7 percent to 9,258.70. The euro traded at $1.1609, the pound slipped to $1.3441, and the dollar gained slightly against the yen at 147.83. Oil benchmarks also weakened, with West Texas Intermediate down 0.7 percent at $64.32 a barrel and Brent crude down 0.6 percent at $68.37. In the United States, the Dow Jones closed Monday 0.8 percent lower at 45,282.47.
Global markets now remain on edge, balancing the potential of interest rate cuts against the growing uncertainty created by Trump’s interventions and trade threats.