(Jan 12): US stock futures fell and the dollar weakened on concern over the Federal Reserve’s (Fed) independence after chair Jerome Powell said threats of a criminal indictment were a consequence of the central bank’s interest-rate policies.
Futures on the S&P 500 Index slipped as much as 0.7% on Monday after Powell said the Fed had been served grand jury subpoenas from the Justice Department over ongoing renovations of its headquarters. Gold jumped as much as 2% to a record, while the Swiss franc, seen as a haven, strengthened as much as 0.5%.
“The Powell investigation is certainly not a great look for the Fed, the US government and US markets as a whole,” said Nick Twidale, the chief market analyst of AT Global Markets in Sydney. “Powell’s comments are very strong and it looks like he is happy to go head to head with the president.”
The threat of a criminal indictment by the Trump administration marks an escalation of the president’s feud with the Fed over the pace of rate cuts. Donald Trump has long called for aggressive reductions while discussing the possibility of firing Powell.
“This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions — or whether instead monetary policy will be directed by political pressure or intimidation,” Powell said in a statement released on Sunday evening.
See also: Asian stocks fluctuate before US jobs data, tariff ruling
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.
Bloomberg’s dollar index dropped as much as 0.2% before trimming declines. The greenback weakened against all its Group-of-10 peers apart from the yen.
US Treasuries dropped at the start of European trading after being closed in Asia due to a holiday in Japan. The benchmark 10-year yield climbed two basis points to 4.19%.
See also: Asian stocks stay range-bound, Treasuries hold gains
Gold and silver both rose to records after the US Justice Department threatened the Fed, and as protests in Iran supported haven demand. Bullion spiked towards US$4,600 an ounce, while silver neared US$85.
Meanwhile, 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.
The MSCI Asia-Pacific excluding Japan Index rose as much as 0.7%. Taiwan Semiconductor Manufacturing Co, Alibaba Group Holding Ltd and Tencent Holdings Ltd provided the biggest boosts to the gauge. Most markets were in the green, with South Korea and Taiwan leading gains.
Shares of China’s biggest food delivery firms jumped on optimism a regulatory investigation will help put an end to a price war that’s been hurting their margins.
Industry leader Meituan, which has been defending market share as its rivals expanded in the industry, surged as much as 8%. Alibaba, the biggest challenger to Meituan, rise as much as 5.4% in Hong Kong, while JD.com Inc added as much as 2%.
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.
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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.
Some of the main moves in markets:
Stocks
- S&P 500 futures had fallen 0.5% as of 7.04am London time on Monday
- Nasdaq 100 futures fell 0.8%
- Futures on the Dow Jones Industrial Average fell 0.4%
- The MSCI Asia-Pacific Index rose 0.4%
- The MSCI Emerging Markets Index rose 0.7%
Currencies
- The Bloomberg Dollar Spot Index fell 0.1%
- The euro rose 0.3% to US$1.1671
- The Japanese yen was little changed at 158.02 per dollar
- The offshore yuan was little changed at 6.9722 per dollar
- The British pound rose 0.2% to US$1.3436
Cryptocurrencies
- Bitcoin rose 1.2% to US$91,677.81
- Ether rose 1.1% to US$3,151.45
Bonds
- The yield on 10-year Treasuries advanced two basis points to 4.19%
Commodities
- Brent crude rose 0.3% to US$63.50 a barrel
- Spot gold rose 1.5% to US$4,577.03 an ounce
Uploaded by Tham Yek Lee
