SYDNEY – Asian stock markets fought to hold their footing on Tuesday after a furious flight from US assets undermined Wall Street and the dollar, while concerns about the independence of the Federal Reserve piled fresh pressure on Treasuries.
Relatively limited losses in Asia sparked talk that funds could be reallocating money to equities in the area, though the impact of tariffs on economic growth remained a major drag.
President Donald Trump’s increasingly vocal attacks on Fed Chair Jerome Powell for not cutting interest rates saw Wall Street indexes shed around 2.5 percent on Monday and the dollar hit three-year lows.
“The ‘sell America’ trade was in full flight,” said Tapas Strickland, head of market economics at NAB.
“Whether or not President Trump is legally able and willing to move against the Fed, the jousting underscores the loss of US exceptionalism and the very real policy risk for investors.”
The selling did abate somewhat in Asia, allowing S&P 500 futures to bounce 0.4 percent and Nasdaq futures 0.5 percent.
The market faces another test from earnings this week, with Tesla due later in the session, having already shed almost 6 percent on Monday amid reports of production delays.
Also reporting this week are Alphabet and a host of high-profile industrials including Boeing, Northrop Grumman, Lockheed Martin and 3M.
The fallout from Wall Street saw Japan’s Nikkei ease a modest 0.3 percent, while MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.2 percent. Chinese blue chips were holding steady for now.
European shares were less fortunate, with futures for the EUROSTOXX 50, FTSE and DAX all down around 0.7 percent in choppy trading.
Yields on US 10-year notes stood at 4.40 percent, having climbed on fears the White House could try and replace Powell with someone more inclined to cut rates, even as inflation was being lifted by Trump’s swingeing tariffs.
