London (AFP) – The dollar mostly fell and gold hit a record high on Monday as investors digested news that the US Justice Department is probing the Federal Reserve, raising fears over the central bank’s independence against President Donald Trump’s push for lower rates.
Wall Street’s main indices opened modestly lower but by early afternoon only the Dow was still in the red, pulled lower by banking stocks after Trump also threatened to cap credit card interest rate charges. European stocks finished mostly higher after a strong showing in Asia.
Fed Chair Jerome Powell confirmed the “unprecedented” subpoenas against the bank in a rare video address on Sunday, which he blasted as part of Trump’s pressure campaign for aggressive rate cuts. “The probe has unnerved markets and raised questions about what might happen to the Fed once Powell steps down in May,” said Russ Mould, investment director at AJ Bell. “There is a fear that Trump is meddling too much with policies that are meant to be set independently,” he added.
Powell said in his statement that “the threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president.” He said the bank received grand jury subpoenas on Friday related to his Senate testimony in June, which had been in part about a major renovation of Federal Reserve office buildings. The Fed has indicated it will hold interest rates steady at its next monetary policy meeting this month.
The dollar fell against the euro and the pound, as did the price of the benchmark 10-year US Treasury bond, sending its yield slightly higher. Gold climbed above $4,600 an ounce while silver approached $86 an ounce as investors sought traditional safe havens. “Beyond monetary and political concerns, gold remains well supported by ongoing geopolitical risks,” said Forex.com analyst Fawad Razaqzada. “While tensions had eased somewhat in recent weeks, the latest flare-up involving Iran has reintroduced a fresh layer of uncertainty,” he added, pointing to the risk of renewed US involvement in the region.
Trump said Sunday that he was considering military action against Iran following reports of hundreds of deaths during a violent crackdown on the protesters. “We’re looking at it very seriously,” Trump told reporters on Air Force One. “The military is looking at it, and we’re looking at some very strong options.”
Oil prices edged higher in volatile trading Monday as protests in Iran and the US seizure of Venezuela’s crude supplies stoked geopolitical risks. Banking stocks, meanwhile, took a hit from Trump’s plans to cap credit card costs at 10 percent that would make credit less available and hurt consumers and businesses. American Express, JPMorgan Chase, and Visa were among the biggest losers on Wall Street’s blue-chip Dow index.
Asian markets advanced Monday, led by gains in Hong Kong and Shanghai and tracking Wall Street’s record close at the end of last week. Tokyo was closed for a holiday.
– Key figures at around 1630 GMT –
New York – Dow: DOWN 0.2 percent at 49,423.70 points
New York – S&P 500: FLAT at 6,968.50
New York – Nasdaq Composite: UP 0.2 percent at 23,723.55
London – FTSE 100: UP 0.2 percent at 10,140.70 (close)
Paris – CAC 40: FLAT at 8,358.76 (close)
Frankfurt – DAX: UP 0.6 percent at 25,405.34 (close)
Hong Kong – Hang Seng Index: UP 1.3 percent at 26,608.48 (close)
Shanghai – Composite: UP 1.1 percent at 4,165.29 (close)
Tokyo – Nikkei 225: (closed for holiday)
Euro/dollar: UP at $1.1678 from $1.1635 on Friday
Pound/dollar: UP at $1.3470 from $1.3407
Dollar/yen: UP at 158.10 yen from 157.88 yen
Euro/pound: DOWN at 86.70 pence from 86.78 pence
Brent North Sea Crude: UP 0.4 percent at $63.60 per barrel
West Texas Intermediate: UP 0.1 percent at $59.20 per barrel
© 2024 AFP
