Global markets plunge after Trump's Fed chair pick

Monday 02 February 2026 - 16:50

By: Dakir Madiha

Global markets plunge after Trump's Fed chair pick

Stock markets worldwide tumbled sharply on Monday as investors grappled with President Donald Trump's nomination of Kevin Warsh as Federal Reserve chair, sparking broad sell-offs in equities, precious metals, and cryptocurrencies. The Friday announcement prompted traders to reassess U.S. monetary policy expectations, unleashing the most volatile session for Asian markets in months.

South Korea's Kospi index spearheaded the declines, plunging as much as 5.5% before regulators stepped in. The Korea Exchange triggered its "sidecar" mechanism at 12:31 local time, halting programmed sell orders for five minutes after Kospi 200 futures dropped over 5%. The benchmark closed down 5.3% at 4,949.67 points, its steepest daily percentage loss since April 2025. Hong Kong's Hang Seng fell nearly 3%, while Japan's Nikkei 225 slipped about 1.3%.

Warsh, a former Fed governor from 2006 to 2011, is viewed as a moderate hawk who has criticized the central bank's balance sheet expansion and urged focus solely on price stability. His prospective role fueled bets on fewer and slower interest rate cuts than previously anticipated. "News of Kevin Warsh as the next Fed chair has shifted markets toward 'fewer/slower cuts'," noted Charu Chanana, head of investment strategy at Saxo Singapore.

U.S. futures tied to the Dow Jones Industrial Average, S&P 500, and Nasdaq slid in overnight trading, with losses ranging from 0.3% to 1.8%. Tech stocks bore the brunt, as expectations of prolonged high rates hammered growth-oriented valuations.

The sell-off rippled beyond equities. Gold cratered up to 10% on Monday after a more than 10% drop Friday, while silver plunged as much as 16%, extending last week's record single-day rout. Both metals had surged to decade-high peaks earlier in January. The CME Group hiked margin requirements for gold futures from 6% to 8% and silver from 11% to 15%, effective post-Monday close, forcing traders to post extra collateral and accelerating liquidations.

Bitcoin extended its slide, trading around $75,000 after dipping below $80,000 for the first time since April, now down over 30% from its peak. Warsh's nomination awaits Senate confirmation; if approved, he would succeed Jerome Powell, whose term ends in May.