Asian stocks managed to hold steady on Tuesday, displaying surprising resilience in the face of a global market storm that saw U.S. equities and the dollar take a heavy beating.
With Wall Street still reeling from President Donald Trump’s latest attacks on Federal Reserve Chair Jerome Powell, the financial world is on edge—and investors are scrambling to make sense of what comes next.
On Monday, Trump intensified his pressure on Powell, criticizing the Fed chief for not cutting interest rates and once again raising fears that the former president might attempt to replace him.
The political noise shook investor confidence, sending the S&P 500 and Nasdaq down by around 2.4%, while the dollar slid to multi-year lows.
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“The ‘sell America’ trade was in full flight,” said Tapas Strickland, Head of Market Economics at National Australia Bank. “Whether or not President Trump is legally able or willing to move against the Fed, the jousting underscores the loss of U.S. exceptionalism and the very real policy risk for investors.”
This exodus from U.S. assets didn’t go unnoticed in Asia. However, losses across the region were relatively muted, sparking speculation that some funds might be reallocating capital toward Asian equities.
Japan’s Nikkei slipped just 0.2%, while the MSCI’s broad index of Asia-Pacific shares outside Japan held firm. Chinese blue-chip stocks actually gained 0.2%, buoyed by Beijing’s stern message to other nations: don’t cut trade deals with the U.S. at China’s expense.
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Despite Monday’s rout, U.S. futures ticked higher in early Tuesday trade, with S&P 500 futures up 0.3% and Nasdaq futures rising 0.4%. The market’s next test will be earnings season, with about 27% of S&P 500 companies set to report this week.
Tech and industrial heavyweights—including Tesla, Alphabet, Boeing, Lockheed Martin, and 3M—are all on deck. Tesla in particular faces scrutiny after falling nearly 6% on Monday amid reports of fresh production delays.
The fallout from Trump’s comments is hitting the greenback hard. The U.S. dollar dropped to its lowest level against a basket of currencies since March 2022, reaching 97.923. It also hit a 10-year low against the Swiss franc and a seven-month low versus the Japanese yen.
“The independence of the Federal Reserve is a cornerstone of the dollar’s credibility,” said Quasar Elizundia, a research strategist at Pepperstone. “The dollar’s status as the ultimate safe-haven asset can no longer be taken for granted; it is being actively challenged.”
The Fed is now in a precarious position. Cutting rates could be perceived as yielding to political pressure, even as Trump’s tariffs threaten to push inflation higher. Meanwhile, long-term bond yields continue to rise, with U.S. 10-year Treasuries climbing to 4.43%.
With the dollar under pressure and investor anxiety rising, gold hit another record high—breaking above $3,485 an ounce. It’s the latest sign that investors are seeking refuge in physical assets amid growing uncertainty.
Oil, on the other hand, saw a modest bounce after recent declines. Brent crude rose by 45 cents to $66.70 a barrel, while U.S. crude gained 65 cents to reach $63.73. Still, fears of a global economic slowdown and expectations of increased supply from OPEC continue to weigh on the outlook for energy prices.
According to analysts at JPMorgan, unless there is a significant shift in current policy direction, the probability of a U.S. recession in 2025 stands at a staggering 90%. And with trade negotiations ongoing but far from resolved, a quick turnaround seems unlikely.
As investors brace for another turbulent week, the focus remains on Washington—and whether politics will continue to override monetary policy.
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