US futures, Asian shares slip, tracking Wall Street’s retreat, while oil falls more than $2
U.S. futures and Asian shares skidded Monday and oil prices fell more than $2 a barrel.
In South Korea, the Kospi tumbled 4.6% to 4,982.54 as worries revived over a potential bubble in the craze for artificial intelligence. Samsung Electronics gave up 3.5%, while chip maker SK Hynix sank 5.6%.
The Kospi has been forging records for weeks as major tech companies piggybacked on the AI craze with deals with major players like chip maker Nvidia.
In other dealigns, the price of gold fell 1%, while silver gained more than 2% after both plunged on Friday in a halt to record runs in precious metals markets.
Markets appeared jittery as investors studied what President Donald Trump’s new nominee to lead the Federal Reserve, Kevin Warsh, will mean for interest rates. The future for the S&P 500 sank 0.9% while that for the Dow Jones Industrial Average fell 0.5%.
U.S. benchmark crude lost $2.80 to $62.41 per barrel. Speaking to reporters aboard Air Force One, 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. Brent crude fell $3 to $66.32 per barrel.
In Tokyo, the Nikkei 225 index edged 0.2% higher to 53,422.01, but other regional benchmarks retreated.
Hong Kong’s Hang Seng dropped 2% to 26,841.45, while the Shanghai Composite index sank 1.1% to 4,071.14.
In Australia, the S&P/ASX 200 fell 1.1% to 8,766.70.
Taiwan’s Taiex lost 2.1%.
On Friday, the S&P 500 dropped 0.4% to 6,930.03. The Dow lost 0.4% to 48,892.47 and the Nasdaq composite lost 0.9% to 23,461.82.
Helping to limit the market’s losses was Tesla, which rose 3.3%. It bounced back after dropping on Thursday despite delivering better profit reports for the latest quarter than analysts expected.
Apple added 0.5% after the iPhone maker reported a stronger profit for the latest quarter than analysts expected.
Warsh’s nomination requires Senate approval. Whoever leads the Fed has a big influence on the economy and markets worldwide by helping to dictate where the U.S. central bank moves interest rates. Such decisions lift or weigh on 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. Trump has been pushing for lower interest rates, which usually help goose the economy but can also cause higher inflation.
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.
A fear in financial markets has been that the Fed will lose some of its independence because of Trump. That fear in turn helped catapult the price of gold and weaken the U.S. dollar’s value over the 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.
On Wall Street, stocks of metals miners tumbled as the price of gold dropped 11.4% to settle at $4,745.10 per ounce. Gold’s price suddenly ran out of momentum following a tremendous rally where it roughly doubled over 12 months. It topped $5,000 for the first time on Monday and was around $5,600 at one point on Thursday.
Silver, which had been on a similar, jaw-dropping tear, plunged 31.4%.
In other action early Monday, the dollar rose to 155.10 Japanese yen from 154.94 yen. The euro climbed to $1.1867 from $1.1853.