Today's Edition
HONG KONG (AFP)
Bullion hit another record Tuesday while the dollar steadied and equities mostly fell as US President Donald Trump fueled fears concerning the central bank's independence.
With the US tariffs still causing ructions on global trading floors, investors are now dealing with the added worry that the US president will try to remove Federal Reserve boss Jerome Powell whom many fear could hammer already fragile market confidence.
Trump took a swipe at Powell last week for his warning that the sweeping levies would likely reignite inflation, saying his "termination cannot come fast enough" and adding, "I'm not happy with him. I let him know it, and if I want him out, he'll be out of there real fast, believe me."
While that raised eyebrows, Trump sent shivers through markets Monday by calling on the Fed boss again to make pre-emptive cuts to interest rates.
He said on his Truth Social platform that there was "virtually" no inflation as energy and food costs were well down and pointed to the several reductions by the European Central Bank.
Panicked Wall Street investors once again dumped US assets, with all three main indexes ending down around 2.5 percent on Monday.
The rush for safety saw gold hit yet another record above $3,457, and while the dollar steadied after the previous day's selloff, it remained under pressure against its major peers.
Stocks swung between gains and losses on the first full day of business after the Easter break.
Hong Kong, Sydney, Taipei, Jakarta, Wellington and Manila dropped, while Shanghai, Singapore and Seoul edged up.
However, analysts warned of another rout if Trump were to try to fire the Fed boss, which many said could cause a crisis of confidence in the US economy.
"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," said Pepperstone strategist Michael Brown.
"Lower, much lower, equities; Treasuries sold across the board; and, the dollar falling off a cliff."
"Any sign of the longstanding, independent nature of the Fed coming under threat would see investors across the globe selling every single US-based asset that they have, and also poses the genuinely scary prospect of upending the entire way in which the global financial system operates."
