(Jan 12): Stock futures and the dollar fell on Monday as investors retreated from US assets following an escalation in tensions between the Trump administration and the Federal Reserve (Fed). Shorter-term Treasuries rose while gold hit a new high.
Contracts on the S&P 500 slipped 0.8% after chair Jerome Powell said the Fed had been served grand jury subpoenas over renovations of its headquarters. Powell said the action was a consequence of policymakers’ reluctance to follow President Donald Trump’s preferences on interest rates.
The dollar dropped by the most since Christmas. The yield on two-year Treasuries slipped one basis point to 3.52% as traders added to bets on near-term rate cuts. Longer-term notes buckled under fears that overly lenient policy could reignite inflation. Gold rallied as much as 2% and the Swiss franc outperformed major currencies as investors sought havens.
“Of course the US is not Türkiye, but there are precedents when a government takes control of the central bank and it doesn’t end well,” said Andrea Tueni, the head of sales trading at Saxo Banque France. “It’s never good when pressure is applied to an institution which is supposed to defend the common interest.”
A gauge for European shares dropped 0.3%. Most Asian stocks rose as a rally in the region’s tech shares and a weaker dollar boosted sentiment, helping offset broader concerns over rising geopolitical tensions.
See also: Stocks roar back as Dow Average hits 50,000 mark
Fed officials have signalled they need more economic data before deciding on further rate cuts, after a third consecutive quarter-point reduction last month. Economists at Morgan Stanley, Barclays plc and Citigroup Inc all pushed back their forecasts of further easing to later in 2026 after monthly US jobs data published last Friday.
Oil held its biggest two-day gain since October, as escalating protests in Iran threatened supply from Opec’s fourth-biggest producer.
Brent traded above US$63 a barrel after jumping almost 6% over Thursday and Friday, while West Texas Intermediate was near US$59. Trump said that the US is closely monitoring the protests in Iran and is mulling potential options as the Islamic republic faces its third week of nationwide protests, the largest since 2022.
See also: How China uses a ‘national team’ to influence trading
Separately, the US Supreme Court last Friday failed to weigh in on Trump’s tariffs. The court’s next opinion day will be on Wednesday.
Elsewhere, Group-of-Seven finance ministers meet in Washington to discuss rare earths on Monday, while New York Fed president John Williams and Atlanta Fed president Raphael Bostic are set to speak.
Corporate news:
- Heineken NV chief executive officer Dolf van den Brink is stepping down as the brewer grapples with falling beer sales and inflation denting consumer demand.
- Deutsche Bank AG’s India retail assets and wealth management have drawn binding bids from Kotak Mahindra Bank Ltd and Federal Bank Ltd, according to people familiar with the matter.
- Shares of China’s biggest food-delivery firms climbed as the nation’s top antitrust body launched a probe into competition practices in the sector, spurring hopes that authorities will rein in subsidy-driven price wars.
- China Vanke Co is bracing for its next major test as the developer navigates a proposal to delay bond payments and drafts broader restructuring plans.
Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 had fallen 0.3% as of 8.30am London time on Monday
- S&P 500 futures fell 0.7%
- Nasdaq 100 futures fell 1.1%
- Futures on the Dow Jones Industrial Average fell 0.5%
- The MSCI Asia-Pacific Index rose 0.5%
- The MSCI Emerging Markets Index rose 0.8%
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Currencies
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro rose 0.4% to US$1.1681
- The Japanese yen was little changed at 157.81 per dollar
- The offshore yuan was little changed at 6.9697 per dollar
- The British pound rose 0.3% to US$1.3449
Cryptocurrencies
- Bitcoin rose 0.7% to US$91,248.98
- Ether rose 0.5% to US$3,132.88
Bonds
- The yield on 10-year Treasuries advanced three basis points to 4.19%
- Germany’s 10-year yield was little changed at 2.86%
- Britain’s 10-year yield advanced two basis points to 4.39%
Commodities
- Brent crude was little changed
- Spot gold rose 1.6% to US$4,582.04 an ounce
Uploaded by Tham Yek Lee
