Wall Street has recovered some overnight losses that took place after President Donald Trump said he was firing Federal Reserve Governor Lisa Cook.
Futures for the Nasdaq, Dow Jones Industrial Average and S&P 500 all inched down about 0.1% before the bell Tuesday. All three swung notably lower after Trump said in a post Monday that he was removing Cook because of allegations of mortgage fraud by his appointee that heads the agency regulating mortgage giants Fannie Mae and Freddie Mac.
It’s an unprecedented action that suggests a sharp escalation in Trump’s battle to exert greater control over what has long been considered an institution independent from day-to-day politics. Apart from potentially rattling financial markets, it is likely to touch off an extensive legal battle that will probably go to the Supreme Court. Cook said that she does not intend to step down.
“Trump’s decision to remove a sitting Fed governor has shaken confidence in the institution that underpins the world’s financial system,” Nigel Green of the financial advisory deVere Group, said in a commentary.
Most markets overseas declined significantly after Trump’s announcement.
Germany’s DAX lost 0.3%, while the CAC 40 in Paris slumped 1.4%. Britain’s FTSE 100 gave up 0.5%.
Trump has repeatedly attacked the Fed’s chair, Jerome Powell, for not cutting its short-term interest rate, and even threatened to fire him.
Wall Street is still overwhelmingly betting that the Fed will cut interest rates at its next meeting in September. Traders see an 84% chance that the central bank will trim its benchmark rate by a quarter of a percentage point, according to data from CME Group.
In Asian trading, most benchmarks declined.
Japan’s benchmark Nikkei 225 dove nearly 1.0% to finish at 42,394.40. Australia’s S&P/ASX 200 declined 0.4% to 8,935.60.
South Korea’s Kospi lost 1.0% to 3,179.36 after data showed improved consumer sentiment, strengthening expectations that the central bank won’t lower interest rates.
Hong Kong’s Hang Seng shed 1.2% to 25,524.92, while the Shanghai Composite slipped 0.4% to 3,868.38.
In corporate news, Boeing shares were little changed after Korean Air has announced a $50 billion deal to buy more than 100 aircraft from the troubled aerospace manufacturer. The deal includes 19 spare engines and a 20-year maintenance contract.
Benchmark U.S. crude lost $1.09 to $63.71 a barrel. Oil prices are down 8% this month and nearly 14% since the beginning of the summer. That’s due to a combination of production increases by OPEC and the summer travel season winding down.
Brent crude, the international standard, declined $1.02 to $67.20 a barrel.
The U.S. dollar edged down to 147.55 Japanese yen from 147.77 yen. The euro rose to $1.1647 from $1.1620.
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