‘Major loser’: Meltdown over Trump move

Absolute misery is playing out in the global economy today as stock markets take another pounding over comments made by Donald Trump.

Absolute misery is playing out in the global economy today — including on the ASX — as stock markets take another pounding over comments made by Donald Trump.

In a sign that the world is growing even more volatile gold prices hit a fresh record overnight — while the US dollar tumbled further along with shares on Wall Street as the US President slammed Federal Reserve Chair Jerome Powell.

Mr Powell is the head of the US’ central bank and he has expressed grave concerns about the economic impact of President Trump’s policies, especially the implementation of global tariffs.

He warned that these tariffs could lead to stagflation — a toxic mix of stagnant economic growth and high inflation — which makes the Fed’s mandate of maintaining stable prices and maximum employment difficult.

President Trump has retaliated in an extraordinary tirade overnight — calling Mr Powell a “major loser” for not cutting interest rates. This comes amid speculation the president will attempt to fire Mr Powell after threatening action last week.

Safe to say that the global markets — after the colossal impact of tariffs over the past few weeks — have not reacted well to the news.

There were fraught scenes on US markets on a day when many global markets were still closed for the Easter holiday.

All three major equity indices finished down by around 2.5 per cent while the US dollar retreated and Treasury bond yields moved higher. Gold prices soared to a fresh record above $3,400.

There is a “narrative of weakening demand for US assets,” said Briefing.com analyst Patrick O’Hare.

President Trump’s continued comments about removing or replacing Mr Powell throws into question the independence of the US central bank in which the Fed is free from political interference.

This is because it sets monetary policy based on the imperatives of ensuring stable prices and achieving maximum employment.

Investors view this tradition as foundational to American markets, and are spooked by the comments.

Overnight the S&P500 — the 500 biggest companies in the US — lost about a hefty 2.36 per cent overnight.

Traders work on the floor of the New York Stock Exchange (NYSE). Picture: SPENCER PLATT / GETTY IMAGES NORTH AMERICA / Getty Images via AFP

Here in Australia, things aren’t looking as bad. The S&P/ASX 200 Index dropped 48.1 points, a fall of 0.6 per cent. But that has been clawed back to 0.19 per cent as of 11.41am.

Jack Ablin, chief investment officer of Cresset Capital Management, said a move to replace Mr Powell with an appointee who would follow President Trump’s demands would bring a “crisis of confidence.”

Analysts also pointed to weakness in influential technology names such as Nvidia, Google parent Alphabet and Apple as another factor in the selling, along with trade tensions.

Several nations have moved to cut a deal with Washington to stem the worst of the White House’s levies, with Japan the highest-profile economy, while US Vice President JD Vance arrived in India on Monday for talks.

However, China warned governments on Monday not to seek an agreement that compromised Beijing’s interests.

While the rest of the world has been slapped with a blanket 10 per cent tariff, China faces levies of up to 145 per cent on many products. Beijing has responded with duties of 125 per cent on US goods.

US President Donald Trump boards Air Force One. Picture: Brendan SMIALOWSKI / AFP)

Stocks had a mixed start to the week, with Tokyo weighed by the stronger yen while Taipei, Jakarta and Bangkok were also in negative territory. Shanghai, Seoul, Singapore, Mumbai and Manila rose.

Oil prices dropped on demand fears as worries about the global economy swirl. Traders are keeping tabs on the release of key April manufacturing data around the world this week, hoping for an idea about the early impact of President Trump’s tariffs.

“One thing that’s absolutely clear — and no longer debatable — is that the reputational hit to the US brand is real, and it’s not fading quietly into the next news cycle,” said Stephen Innes at SPI Asset Management.

“It’s sticking. Investors, allies, and even central banks are starting to bake in the idea that American policymaking, both fiscal and monetary, is now a geopolitical variable — not a given,” he added.