Bangkok, Jan 12 (AP) US futures sank Monday after Federal Reserve Chair Jerome Powell said the Department of Justice had served the central bank with subpoenas.
Markets in Europe were mostly lower after a broad rally in Asia.
The threat of a criminal indictment over Powell’s testimony about the Fed’s building renovations is the latest escalation in President Donald Trump’s feud with the Fed. Trump has criticised the USD 2.5 billion renovation of two office buildings as excessive.
Markets appeared to take the news in stride, although gold and other precious metals, often used as a hedge in times of uncertainty, climbed.
The future for the S&P 500 declined 0.7 per cent, and that for the Dow Jones Industrial Average fell 0.6 per cent. The future for the Nasdaq composite index slipped 1.1 per cent.
In Germany, the DAX was nearly flat at 25,265.46, while the CAC 40 in Paris shed 0.5 per cent to 8,319.03. Britain’s FTSE 100 edged 0.1 per cent lower, to 10,114.82.
In Asian trading, Hong Kong’s Hang Seng gained 1.4 per cent to 26,608.48, while the Shanghai Composite index jumped 1.1 per cent to 4,165.29 after reports that Chinese leaders were preparing more help for the economy.
Tokyo’s markets were closed for a holiday.
In South Korea, the Kospi added 0.8 per cent to 4,624.79, while Australia’s S&P/ASX 200 gained 0.5 per cent to 8,759.40.
Taiwan’s Taiex gained 0.9 per cent.
On Friday, US stocks hit records following a mixed report on the US job market, one that may delay another cut to interest rates by the Federal Reserve but does not slam the door on it.
Powell’s term as chair ends in May, and Trump administration officials have signalled that he could name a potential replacement this month. Trump has also sought to fire Fed governor Lisa Cook.
In a brief interview with NBC News on Sunday, Trump insisted he didn’t know about the investigation into Powell. When asked if the investigation is intended to pressure Powell on rates, Trump said, “No. I wouldn’t even think of doing it that way.” The S&P 500 climbed 0.6 per cent to 6,966.28, topping its prior all-time high set earlier in the week. The Dow Jones Industrial Average added 0.5 per cent to 49,504.07, and likewise set a record.
The Nasdaq composite led the market with a 0.8 per cent gain, closing at 23,671.35.
The US Labour Department said employers hired fewer workers during December than economists expected, though the unemployment rate improved and was better than expected. It reinforced how the US job market may be in a “ low-hire, low-fire” state and may hopefully avoid a recession.
An update on US inflation at the consumer level is due on Tuesday, followed by a report on wholesale prices on Wednesday.
In other dealings early Monday, the dollar fell to 157.77 Japanese yen from 158.03 yen.
The euro climbed to USD 1.1690 from USD 1.1635 late Friday.
US benchmark crude oil gave up early gains, falling 12 cents to USD 59.00 per barrel. Brent crude, the international standard, shed 9 cents to USD 63.25 per barrel.
The price of gold rose 2.3 per cent, and the price of silver jumped 6.3 per cent. Copper was up 1.4 per cent. (AP) SKS SKS
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