Wall Street and USD Slide After Trump Attacks Fed Chair

Yesterday, whilst many European markets remained closed, Wall Street witnessed another turbulent session as US President Donald Trump took aim at Federal Reserve Chair Jerome Powell.

Trump Attacks Fed Chair, Again

On Monday, President Trump renewed attacks on Fed Chair Jerome Powell on social media. The president wrote that the US economy may be heading for a slowdown “unless Mr. Too Late, a major loser, lowers interest rates, NOW”.

The US president has regularly criticised Powell for not lowering interest rates quickly enough. Yesterday’s comments added to uncertainty regarding the US economy and followed a similar attack last week, in which Trump appeared to call for Powell to be fired.

President Trump’s comments pre-empted a sell-off in US equities, with the S&P 500, Dow Jones and Nasdaq closing the session more than 2% lower.

The US dollar also extended recent losses. The Dollar Index, which measures the greenback against a basket of foreign currencies, ended 1.1% lower on Monday, hitting its lowest level in more than three years.

Other Movements in the Market

Whilst Trump's comments sparked a sell off in US stocks and the US dollar, money continued to flow into gold, as investors seek safe havens.  

The shiny metal jumped 3.5% yesterday and continued to rise on Tuesday morning, taking its year-to-date gains to more than 30% so far in 2025.  

In the Forex market, the Swiss franc, Japanese yen and euro continued to gain ground on the US dollar.  

Since Donald Trump’s “liberation day” announcement on 2 April, the franc has gained around 8.4% against the dollar, hitting a ten-year high in the process.  

The yen and the euro have both climbed around 6.2% over the same timeframe, with the euro hitting its highest level since November 2021. 

ECB Slashes Rates

Last Thursday, the European Central Bank (ECB) cut interest rates by 25 basis points, as had been widely expected.

The latest interest rate reduction, the central bank's third this year, came after annual headline inflation in the euro area fell to 2.2% in March, with the ECB noting that “the disinflation process is well on track”.

However, the prospect of a potential trade war with the US undoubtedly also played a part in the decision to cut rates. In its policy statement, the ECB noted that “the outlook for growth has deteriorated due to rising trade tensions”.

Earnings Watch

We are currently in earnings season, with many companies scheduled to announce results from the first quarter of the year over the coming weeks.

Last week, Netflix released strong Q1 results which beat expectations thanks to resilient subscription revenue in the face of consumer caution. 

Revenue and Earnings per Share (EPS) grew by more than expected to $10.54 billion and $6.61 respectively in the first quarter. The streaming giant reiterated its full-year revenue guidance of $43.5-$44.5 billion.

Conversely, UnitedHealth’s quarterly earnings, announced on Thursday, missed analyst expectations. The US health insurance company also slashed its full-year profit forecast, causing share price to tumble 22% in the following session.

This week will see a number of other high-profile companies releasing quarterly earnings including Tesla, on Tuesday, and Google parent Alphabet, on Thursday.

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