Asia Stocks Fall, Metals Slump as Markets Digest Trump's Fed Chair Pick

By Kimberley Kao

Asian stocks fell on Monday and metals tumbled as markets digested President Trump's nomination of Kevin Warsh as the next head of the Federal Reserve.

Equities indexes in Asia followed a negative lead from Wall Street on Friday, while the massive rallies staged by gold and silver unwound further as market participants weigh the implications of a possibly slower, shallower easing cycle under a Warsh-led Fed.

Trump's Fed pick has unleashed volatility across asset classes as investors reassess positioning in currencies, commodities and equities, particularly after the dollar rebounded, said Tareck Horchani at Maybank Securities.

Risk-off sentiment continues to filter through Asia, dragging down precious metals and technology-linked equities, which benefited from dollar weakness and are heavily represented in Asian benchmarks, Horchani added.

A steep selloff in South Korea triggered a brief trading halt as regulators sought to quell volatility. The benchmark Kospi was down 5.1% in afternoon trade as large-cap tech stocks dropped.

Japan's Nikkei Stock Average erased early gains to last sit 0.9% lower, while Hong Kong's Hang Seng Index fell 2.4% and China's Shanghai Composite Index was down 1.7%.

U.S. futures tied to the Dow, S&P 500, and Nasdaq were trading 0.75%, 1.1% and 1.4% lower.

"The news of Kevin Warsh as the next Fed chair has nudged markets toward 'fewer/slower cuts'", Charu Chanana, chief investment strategist at Saxo Singapore said.

Warsh has been a critic of the Fed in the past, opining that it should only have one mandate: price stability, Maybank analysts wrote in a note. His nomination has prompted market players to drop the "dollar debasement" narrative, sending gold, silver and copper tumbling after sharp run-ups in January, they said.

Spot gold was last down 4.6% while spot silver slumped over 9%. The three-month LME copper contract was 3.8% lower. Mining stocks in Indonesia, China and South Korea slid, with major names like Vale Indonesia, Zijin Mining and Korea Zinc notching sharp losses.

The pullback in metals is having a domino effect, Chanana said.

"Once metals turn into a leverage unwind, the spillover is classic: forced de-risking and 'sell what's liquid to raise cash,' which hits equities too," she said.

Write to Kimberley Kao at [e-mail]

(END) Dow Jones Newswires

02-02-26 0059ET