Asia Steady as 'Sell America' Hits Dollar and U.S. Assets
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Asian equities showed resilience on Tuesday, with regional losses remaining limited despite a sharp retreat on Wall Street and a steep drop in the U.S. dollar, which has now touched multi-year lows against major peers. The broader macro narrative continues to be dominated by political pressure from President Donald Trump on Federal Reserve Chair Jay Powell, fuelling investor concerns over monetary policy independence and accelerating a broad-based repositioning away from U.S. assets.
While the S&P 500 and Nasdaq lost roughly 2.4% on Monday amid a wave of risk aversion, Asian benchmarks like Japan’s Nikkei edged just 0.2% lower, and MSCI’s Asia-Pacific ex-Japan index remained flat. Chinese blue chips even gained 0.2% as Beijing pushed back diplomatically against U.S. trade negotiations with third parties. The muted reaction in Asia is raising speculation that global capital may be reallocating toward the region’s equity markets amid doubts over U.S. exceptionalism and concern that the Fed may lose policy independence. S&P 500 and Nasdaq futures rebounded modestly in early Tuesday trade, up 0.3% and 0.4% respectively, hinting at tentative stabilization.
The bond market tells a parallel story. U.S. 10-year Treasury yields rose slightly to 4.43%, pricing in a potential political reshuffle at the Fed, or alternatively, a more cautious approach to future rate cuts that could be interpreted as resistance to White House pressure. The standoff underscores a growing credibility crisis for U.S. monetary policy—compounded by tariff-driven inflation, sluggish trade negotiations, and renewed fears of a 2025 recession. JPMorgan analysts now assign a 90% probability to a U.S. recession next year if current policies persist, citing structural delays in the trade deal pipeline.
The most visible pressure point remains the U.S. dollar. The DXY index fell to 97.923, marking its lowest since March 2022. The greenback struck a 10-year low against the Swiss franc (USD/CHF at 0.8042), a fresh seven-month trough against the yen (139.92), and broke through key resistance versus the euro, touching 1.1538. Strategists are increasingly questioning the dollar's status as a safe-haven asset, with its perceived reliability now tied to the Fed’s institutional autonomy. As Pepperstone’s Quasar Elizundia notes, “The dollar’s credibility is anchored to Fed independence—once that anchor drifts, the safe-haven narrative starts to unwind.”
In commodity markets, safe-haven demand pushed gold to a new all-time high above $3,485 per ounce, while oil prices showed a mild rebound after last week’s slump. Brent rose 45 cents to $66.70 per barrel and WTI added 65 cents to trade at $63.73, though the overall trend remains soft as global slowdown fears outweigh short-term supply concerns from OPEC.
With over a quarter of S&P 500 companies set to report earnings this week—including Tesla, Alphabet, Boeing, and Lockheed Martin—markets will be watching not just for top-line beats, but for forward guidance amid an environment increasingly dominated by macro uncertainty and political risk. For now, Asian markets are absorbing global shocks with relative stability, but volatility remains elevated, and the next move may depend more on policy signals out of Washington than fundamentals across the Pacific.
While the S&P 500 and Nasdaq lost roughly 2.4% on Monday amid a wave of risk aversion, Asian benchmarks like Japan’s Nikkei edged just 0.2% lower, and MSCI’s Asia-Pacific ex-Japan index remained flat. Chinese blue chips even gained 0.2% as Beijing pushed back diplomatically against U.S. trade negotiations with third parties. The muted reaction in Asia is raising speculation that global capital may be reallocating toward the region’s equity markets amid doubts over U.S. exceptionalism and concern that the Fed may lose policy independence. S&P 500 and Nasdaq futures rebounded modestly in early Tuesday trade, up 0.3% and 0.4% respectively, hinting at tentative stabilization.
The bond market tells a parallel story. U.S. 10-year Treasury yields rose slightly to 4.43%, pricing in a potential political reshuffle at the Fed, or alternatively, a more cautious approach to future rate cuts that could be interpreted as resistance to White House pressure. The standoff underscores a growing credibility crisis for U.S. monetary policy—compounded by tariff-driven inflation, sluggish trade negotiations, and renewed fears of a 2025 recession. JPMorgan analysts now assign a 90% probability to a U.S. recession next year if current policies persist, citing structural delays in the trade deal pipeline.
The most visible pressure point remains the U.S. dollar. The DXY index fell to 97.923, marking its lowest since March 2022. The greenback struck a 10-year low against the Swiss franc (USD/CHF at 0.8042), a fresh seven-month trough against the yen (139.92), and broke through key resistance versus the euro, touching 1.1538. Strategists are increasingly questioning the dollar's status as a safe-haven asset, with its perceived reliability now tied to the Fed’s institutional autonomy. As Pepperstone’s Quasar Elizundia notes, “The dollar’s credibility is anchored to Fed independence—once that anchor drifts, the safe-haven narrative starts to unwind.”
In commodity markets, safe-haven demand pushed gold to a new all-time high above $3,485 per ounce, while oil prices showed a mild rebound after last week’s slump. Brent rose 45 cents to $66.70 per barrel and WTI added 65 cents to trade at $63.73, though the overall trend remains soft as global slowdown fears outweigh short-term supply concerns from OPEC.
With over a quarter of S&P 500 companies set to report earnings this week—including Tesla, Alphabet, Boeing, and Lockheed Martin—markets will be watching not just for top-line beats, but for forward guidance amid an environment increasingly dominated by macro uncertainty and political risk. For now, Asian markets are absorbing global shocks with relative stability, but volatility remains elevated, and the next move may depend more on policy signals out of Washington than fundamentals across the Pacific.