Asian stock markets struggled to stay afloat on Tuesday following a sharp global sell-off sparked by investor flight from U.S. assets, which battered Wall Street and sent the dollar tumbling to a three-year low.
Despite mounting pressure on U.S. Treasuries and concerns over the Federal Reserve’s independence, losses in Asian markets remained relatively subdued. Analysts suggest this may indicate a reallocation of global funds toward Asian equities, even as ongoing tariff concerns continue to weigh on regional growth prospects.
The turbulence was triggered in part by former U.S. President Donald Trump’s intensifying criticism of Federal Reserve Chair Jerome Powell, urging aggressive rate cuts. The political interference rattled investor confidence, sending major U.S. indices plunging by around 2.4% on Monday.
“The ‘sell America’ sentiment dominated trading,” said Tapas Strickland, head of market economics at NAB. “Trump’s comments highlight growing policy risks and a fading narrative of U.S. market superiority.”
Some relief was seen in Asia on Tuesday, as S&P 500 and Nasdaq futures edged up by 0.3% and 0.4% respectively. However, investor caution remains high with nearly 27% of S&P 500 companies slated to release earnings this week. Tesla, which dropped nearly 6% on Monday amid production delay reports, leads a high-stakes lineup that also includes Alphabet, Boeing, Northrop Grumman, Lockheed Martin, and 3M.
In regional trading, Japan’s Nikkei slipped just 0.2%, while MSCI’s broadest index of Asia-Pacific shares outside Japan remained stable. Chinese blue chips nudged up 0.2% after Beijing issued a stern warning to foreign governments against signing trade deals with Washington that could harm China’s interests.
European markets mirrored the cautious mood, with EUROSTOXX 50 and DAX futures down 0.5%, and FTSE futures dipping 0.1%.