U.S. futures and world shares skidded on Monday as worries over President Donald Trump’s nominee to be the next Federal Reserve chair amplified jitters over a possible bubble in the artificial intelligence boom.
South Korea’s exchange, which is heavily influenced by tech-related developments, briefly suspended trading as its benchmark Kospi bounced, closing 5.3% lower at 4,949.67. Samsung Electronics gave up 6.3%, while chip maker SK Hynix sank 8.7%.
The Kospi has been forging records for weeks as big tech companies piggybacked on the AI craze with deals with major players like chip maker Nvidia and OpenAI.
In early European trading, Germany's DAX edged less than 0.1% lower to 24,528.57. The CAC 40 in Paris shed 0.2% to 8,108.56, while Britain's FTSE 100 declined 0.3% to 10,195.88.
The future for the S&P 500 sank 0.7%, while that for the Dow Jones Industrial Average fell 0.4%.
Markets took a hit as investors considered how Kevin Warsh, Trump’s nominee to lead the Federal Reserve after Fed Chair Jerome Powell's term ends in May might handle interest rates.
Warsh’s nomination requires Senate approval. But financial markets fear the Fed may lose some of its independence because of Trump, who has pushed hard for more and faster rate cuts. That fear has helped catapult skyward the price of gold and weaken the U.S. dollar’s value over the last year.
“People do not get handed the keys to the most powerful central bank on earth because they plan to drive in the opposite direction of the people who gave them the keys,” Stephen Innes of SPI Asset Management said in a commentary.
Early Monday, the price of gold fell 1.9%, while silver bounced back slightly, gaining 0.2%. Both plunged Friday as record runs in precious metals markets ground to a halt.
On Friday, the price of gold dropped 11.4%, suddenly losing momentum after a tremendous rally where it roughly doubled over 12 months. It topped $5,000 for the first time on Jan. 26 and was around $5,600 at one point on Thursday.
Silver, which had been on a similar, jaw-dropping tear, plunged 31.4%.
U.S. benchmark crude oil lost $3.46 to $61.75 per barrel, while Brent crude, the international standard, fell $3.47 to $65.85 per barrel.
Speaking to reporters during the weekend, Trump said Iran should negotiate a “satisfactory” deal to prevent the Middle Eastern country from getting any nuclear weapons.
“I don’t know that they will. But they are talking to us. Seriously talking to us,” he said.
That comment apparently assuaged some worries over potential disruptions to oil supplies that had pushed prices higher, analysts said.
In Tokyo, the Nikkei 225 gave up early gains, sinking 1.3% to 52,655.18.
Hong Kong's Hang Seng dropped 2.2% to 26,775.57, while the Shanghai Composite index sank 2.5% to 4,015.75.
In Australia, the S&P/ASX 200 fell 1% to 8,778.60.
Taiwan's Taiex lost 1.4%.
On Friday, the S&P 500 dropped 0.4% and the Dow lost 0.4%. The Nasdaq composite lost 0.9%.
The Fed chair has a big influence on the economy and markets worldwide by helping to dictate where the U.S. central bank moves interest rates. That affects prices for all kinds of investments, as the Fed tries to keep the U.S. job market humming without letting inflation get out of control.
A report released Friday showed U.S. inflation at the wholesale level was hotter last month than economists expected. That could put pressure on the Fed to keep interest rates steady for a while instead of cutting them, as it did late last year.
The longtime assumption has been that the Fed should operate separately from the rest of Washington so that it can make moves that are painful in the short term but necessary for the long term. To get inflation down to the Fed’s goal of 2%, for example, may require the unpopular choice to keep interest rates high and grind down on the economy for a while.
In other action early Monday, the dollar fell to 154.88 Japanese yen from 154.94 yen. The euro was unchanged at $1.1853.
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