HONG KONG: Asian equities posted gains Monday (Jan 12) while the dollar dipped as investors digested news that the US Justice Department subpoenaed the Federal Reserve, raising fears over US central bank independence.
Fed Chair Jerome Powell confirmed the unprecedented move late Sunday, which he blasted as part of US President Donald Trump’s pressure campaign for another rate cut. The Fed has indicated it would hold rates steady.
“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President,” Powell said in a statement late Sunday.
Powell said the bank received grand jury subpoenas on Friday related to his Senate testimony in June, which had been about a major renovation project of Federal Reserve office buildings.
It came on the heels of Friday’s soft US jobs report showing just 50,000 new positions in December and unemployment slipping to 4.4 per cent.
The dollar fell about 0.2 per cent against major peers, according to Bloomberg, while gold surged 1.5 per cent as investors faced with political uncertainty sought safe havens.
Asian markets posted gains in early trade. Hong Kong, Shanghai, Seoul and Taipei climbed, tracking Wall Street’s record close Friday.
Bangkok, Manila, Singapore, Kuala Lumpur, and Jakarta were also up.
Most stock markets have enjoyed a solid start to the year, with indices in Frankfurt, London, Paris and Seoul hitting record highs last week, largely on optimism for the tech sector and gains in defence sector shares.
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