Global Markets Slide on Fed Uncertainty as Oil and Metals Rout

Asian equity markets followed Wall Street futures down, as traders digested Friday's metal shock and were cautious ahead of a busy schedule. MSCI's broad Asia-Pacific index, excluding Japan, sank 0.7%, while South Korea fell 1.0%. Asian markets fell alongside Wall Street futures on Monday, as frantic selling in precious metals set the tone for a week jam-packed with corporate earnings, central bank meetings, and significant economic data.

Why This News Matters: The markets aren't just moving around; they're trying to change the price of risk across the board. Stocks, metals, oil, and currencies have all moved sharply because people are worried about what a possible change in leadership at the Federal Reserve could mean for interest rates and inflation, especially with Donald Trump as president and Kevin Warsh as his Fed pick. At the same time, the brutal selloff in gold and silver suggests that crowded "safe haven" trades are coming to an end quickly. In Asia, tech-heavy markets are wondering if the AI boom has gone too far, too fast. With oil prices falling and a busy week of earnings and central bank meetings ahead, it's clear that investors are getting ready for volatility, not clarity.

Asia-Pacific Equity Markets South Korea's Kospi fell 4.6% to 4,982.54 as concerns about a potential artificial intelligence bubble resurfaced. Samsung Electronics down 3.5%, while chipmaker SK Hynix fell 5.6%. The Kospi has been breaking records for weeks as major tech businesses capitalized on the AI frenzy with partnerships with significant players like as chipmaker Nvidia. In Tokyo, the Nikkei 225 index rose 0.2% to 53,422.01, but other regional benchmarks fell. Hong Kong's Hang Seng fell 2% to 26,841.45, while the Shanghai Composite index fell 1.1% to 4,071.14. In Australia, the S&P/ASX 200 index dropped 1.1% to 8,766.70. Taiwan's Taiex fell 2.1%. Japan stood out. The Nikkei 225 rose 0.7% as opinion surveys predicted a landslide victory for Prime Minister Sanae Takaichi's Liberal Democratic Party in next week's lower house election, which investors saw as supportive of large-scale stimulus and a cheaper currency.

The concerns caused South Korea's usually high-flying KOSPI (.KS11) to fall 5.5%, the most one-day loss since the tariff-induced market chaos of April last year. MSCI's broadest index of Asia-Pacific equities outside Japan fell 2.8%, while Chinese blue chips lost 1.0%, with gold indexes falling sharply. Japan's Nikkei slumped 1.0%, boosted only temporarily by an opinion poll indicating Prime Minister Sanae Takaichi's Liberal Democratic Party will win a landslide victory in next week's lower house election.

Wall Street Performance & Corporate Earnings On Friday, the S&P 500 fell 0.4% to 6,930.03. The Dow fell 0.4% to 48,892.47, while the Nasdaq composite dropped 0.9% to 23,461.82. Tesla surged 3.3%, helping to limit the market's losses. It recovered after falling on Thursday, despite reporting higher earnings results for the most recent quarter than analysts predicted. Apple rose 0.5% as the iPhone maker announced a higher profit for the most recent quarter than analysts predicted. Equity futures in Europe and the United States moved lower, with S&P 500 futures down 0.2% and Nasdaq futures down 0.4%, as investors braced for Alphabet, Amazon, and AMD earnings, as well as more scrutiny of AI spending after Microsoft received a cold greeting.

S&P 500 futures sank 1.2%, while Nasdaq futures fell 1.6%, with much relying on earnings to underpin valuations. Approximately one-quarter of the S&P 500 is scheduled to report this week. The focus will be on tech behemoths Alphabet, Amazon, and AMD, specifically the costs and benefits of AI in the aftermath of Microsoft's disappointing results.

Federal Reserve, Rates & Inflation Concerns Warsh's nomination requires Senate confirmation. Whoever runs the Fed has a significant impact on the global economy and markets by influencing where the US central bank sets interest rates. Trump has been advocating for lower interest rates, which typically boost the economy but can also lead to increased inflation. According to a survey released on Friday, wholesale inflation in the United States rose faster than economists predicted last month. Financial markets are concerned that Trump's presidency will reduce the Fed's independence.

The long-held belief has been that the Fed should function independently of the rest of Washington, allowing it to make short-term difficult but long-term important decisions. Analysts felt Warsh would be less likely to advocate for all-out quick rate cuts than other potential candidates, despite sounding more dovish than current head Jerome Powell. Market expectations remained for two rate cuts this year, with a move unlikely until June.

Precious Metals Crash & Commodity Volatility In other news, the price of gold plummeted 1%, while silver rose more than 2% after both slumped on Friday, putting an end to record runs in precious metals markets. On Wall Street, metals miners' equities plummeted as gold fell 11.4% to $4,745.10 per ounce. Gold's price abruptly lost pace after a massive surge in which it nearly doubled over a year. Silver, which had been on a similar, jaw-dropping run, fell 31.4%. Silver fell another 10% at one point, as Friday's 30% drop strained leveraged holdings in an already crowded trade. The CME's decision to raise margins on a variety of futures commodities, including gold and silver, fueled concerns. Gold lost 4.1% to $4,665 per ounce, after dropping over 10% on Friday. Silver was last down 7.0% at $78.61, with trading extremely turbulent.

Oil Prices & Geopolitical Risk US benchmark crude fell $2.80 to $62.41 a barrel. Speaking to reporters on Air Force One, Trump said Iran should reach a "satisfactory" agreement to prevent the Middle Eastern country from acquiring nuclear weapons. "I'm not sure that they will. But they're talking to us. He said he was seriously talking to us. That remark appeared to assuage some concerns about potential interruptions to oil supplies, which had pushed prices higher. Brent crude declined by $3 to $66.32 per barrel. Oil fell about 3% after Trump announced over the weekend that Iran was "seriously talking" with Washington. Brent fell 4.5% to $66.30 per barrel, while US crude lost 4.6% to $62.19 per barrel.

Stocks sink with oil and metals as Fed pick Kevin Warsh sparks uncertainty ahead of big earnings week

U.S. futures dropped with S&P 500 down 0.9% and Asian markets followed, led by South Korea's Kospi plunging 4.6% on AI bubble fears. Gold and silver extended sharp selloffs after Friday's record drops, while oil fell over $2 on Trump comments about Iran talks. Investors eye Alphabet, Amazon, AMD earnings and central bank meetings amid rate cut expectations.

Trump's nomination of Kevin Warsh for Fed chair raises questions on interest rates and Fed independence. Precious metals crashed from recent highs due to margin hikes and profit-taking, with gold down sharply to around $4,700 and silver volatile. Markets brace for volatility from earnings, macro data, and policy signals.