Asian markets retreated on Tuesday, rattled by a series of surprise announcements from former U.S. President Donald Trump, including the dismissal of a U.S. Federal Reserve official and fresh threats targeting global tech trade.

Investors, who had been buoyed by U.S. Federal Reserve Chair Jerome Powell’s Friday speech hinting at upcoming interest rate cuts, quickly shifted into risk-off mode as markets digested Trump’s latest political moves and aggressive economic rhetoric.

Tokyo`s Nikkei 225 led losses, falling 1.0% to 42,365.52 by midday. Other major benchmarks in Hong Kong, Shanghai, Seoul, Taipei, and Sydney also opened in negative territory, following Monday’s declines in New York and European markets.

The nervous sentiment stemmed largely from Trump’s late-Monday announcement that he was firing Federal Reserve Governor Lisa Cook, citing alleged false statements related to mortgage agreements — an extraordinary move that raises concerns about the political independence of the U.S. central bank.

Trump has repeatedly pressured the Fed to accelerate rate cuts and is now seen as intensifying efforts to influence monetary policy. Analysts warn this could undermine investor confidence and the Fed’s credibility.

“The independence of the Fed, already a fraying banner, looks tattered against the gusts of politics,” wrote Stephen Innes of SPI Asset Management.
“What’s left is a central bank suddenly with a missing vote, a looming inflation test on Friday, and a president willing to make personnel changes with the flair of a ringmaster cracking the whip.”

Tech jitters ahead of Nvidia earnings

Adding to the pressure is growing caution ahead of Nvidia’s earnings report, due this week. As a global leader in AI chip production, Nvidia`s performance is considered a key indicator for the tech sector, and any signs of weakness could rattle broader markets amid fears of a potential tech bubble.

Trump also vowed to impose “substantial additional tariffs” on countries that do not withdraw digital service taxes and tech regulations he claims unfairly target U.S. firms. He further threatened new export restrictions on sensitive U.S. technologies and microchips, though no specifics were provided.

Currency and commodities reaction

The U.S. dollar weakened, while gold — a traditional safe haven — rose. Currency movements as of 02:15 GMT showed:

Euro/dollar: Up at $1.1644 (from $1.1624)

Pound/dollar: Up at $1.3475 (from $1.3460)

Dollar/yen: Down at 147.42 yen (from 147.70 yen)

Euro/pound: Up at 86.42 pence (from 86.35 pence)

Oil prices also edged lower, retracing recent gains amid speculation of a possible peace deal in Ukraine:

West Texas Intermediate (WTI): Down 0.5% at $64.49 per barrel

Brent crude: Down 0.4% at $68.51 per barrel

Wall Street recap and outlook

On Monday, the Dow Jones Industrial Average closed down 0.8% at 45,282.47, as investor focus shifted from Fed policy optimism to renewed geopolitical and economic uncertainty. The London FTSE 100 was closed for a holiday.

Markets now await two major U.S. data releases later this week: a GDP report on Thursday, and a closely watched inflation gauge on Friday, which could offer fresh clues on the Fed’s next move.

With political developments escalating and economic data looming, global investors are bracing for a volatile week ahead.