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Wall Street tumbles as Trump ramps up attack on Fed Chair Powell

On the New York stock exchange stock indices slumped on Monday in response to US President Trump’s renewed criticism of Fed Chair Powell, reigniting the debate about the Fed's independence. Meanwhile, China’s central bank held lending rates unchanged on Monday, following the ECB’s latest interest rates cut at the end of last week and ECB President Lagarde’s warning of a deteriorating growth outlook on trade tensions. Looking ahead, preliminary Purchasing Managers’ Indices (PMIs) will be released for France, Germany, and the euro area on Wednesday, followed by the German Ifo Business Climate Index on Thursday. 

  • Date
  • Author Alessandro Fezzi, LGT Research Content & Publications
  • Reading time 5 minutes

Trump

US President Donald Trump has criticised Federal Reserve Chair Jerome Powell, suggesting his termination should be expedited. Trump's remarks at the end of last week indicated frustration with the Fed's decision not to lower interest rates this year, contrasting with the ECB’s recent rate cuts. Powell's term as chair continues until May 2026, but Trump's comments have reignited debates about the Fed's independence.

On Monday, Trump even ratcheted up his pressure campaign on Powell, calling him "Mr. Too Late, a major loser" and warning that the US economy could slow down unless interest rates are lowered immediately.

Trump’s economic approval rating hits record low

President Trump’s economic approval rating has fallen to its lowest level, according to a CNBC survey released on the weekend. The survey, conducted from April 9 to 13, shows 43% of Americans approve of Trump’s economic management while 55% disapprove, marking his first net negative rating on the economy. The decline is attributed to dissatisfaction with tariffs, inflation, and government spending. Despite solid support from his Republican base, independents and Democrats have become increasingly critical, with 49% of the public believing the economy will worsen over the next year.

On Wall Street, the Dow Jones Industrial Average traded partly more than 1000 points lower, closing 972 points in the red, or 2.5% at 38,170.41 points. The S&P 500 shed 2.4%, and the Nasdaq Composite lost 2.6%. "Magnificent Seven" tech titans dragged the major indexes lower, with Tesla and Nvidia respectively losing 6% and nearly 5%.

Asian stock markets subdued after Trump’s Fed attack

Asia-Pacific markets were subdued on Tuesday, following the sell-off on Wall Street. However, indices recovered some of the earlier losses. Shortly before the close, Japan’s Nikkei 225 and Topix traded 0.2% lower, while South Korea’s Kospi lost 0.1%. Australia’s S&P/ASX 200 temporarily fell 0.6%, and Hong Kong’s Hang Seng Index traded flat.

China holds lending rates steady amid trade tensions

China’s central bank maintained its key loan prime rates on Monday, with the 1-year rate at 3.10% and the 5-year rate at 3.60%, amid ongoing trade tensions with the US. This decision comes as the Chinese yuan faces pressure, although it appreciated slightly against the US dollar following the announcement.

China warns of retaliation over US alliances

China warned on Monday it will retaliate against countries aligning with the US in ways that harm Beijing’s interests. This follows the US administration's strategy to leverage tariff negotiations to limit partners' dealings with China. The Chinese Ministry of Commerce stated it would take reciprocal countermeasures against any agreements reached at China's expense. Recently, China imposed 125% tariffs on US imports and restricted critical mineral exports, escalating the trade conflict.

ECB cuts interest rates amid trade tensions

The European Central Bank reduced interest rates by 25 basis points on Thursday, lowering the deposit facility rate to 2.25% due to deteriorating growth prospects linked to global trade tensions. This move, widely anticipated by markets, follows the ECB’s previous rate of 4% in mid-2023. Analysts attribute the cut to recent tariff developments, which have heightened economic uncertainty in the euro area. Investors are now focusing on potential changes in the ECB's stance on the neutral rate and future monetary policy direction.

Corporate news in focus: Quarterly figures from SAP, Chubb, Danaher, Lockheed Martin, Northrop Grumman, Tesla, and Verizon.

Economic data in focus: IMF meeting in Washington, euro-area consumer confidence (16:00), Richmond Fed Manufacturing Index (16:00).

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Global economic and market trends at a glance

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.

LGT Navigator Powell warns tariffs may challenge Fed - US stocks tumble All articles LGT Navigator Stock markets in the US and Asia rebound on trade optimism, while the IMF cuts its growth forecasts
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