Global markets were thrown into turmoil on Tuesday after US President Donald Trump announced the dismissal of Federal Reserve Governor Lisa Cook, raising fresh concerns over central bank independence and triggering sharp volatility in equities, bonds and currencies.
Markets reel under political shock
Asian equities fell heavily at the open, with Japan’s Nikkei 225 down more than 1% and similar losses across South Korea, Hong Kong and Shanghai. European futures signalled declines ahead of the open, while US futures extended losses. Bond markets swung sharply, with short-term yields falling and longer maturities rising, as traders recalibrated interest rate expectations.
Dollar weakens as safe havens gain
The US dollar index dropped 0.3% in Asian trading, while the yen and gold advanced. Analysts said the dismissal of a Federal Reserve governor eroded institutional credibility and undermined investor confidence. “This is a political intervention in the heart of monetary policy, and markets are reacting accordingly,” one strategist commented.
Banking sector under pressure
Traditional banks faced renewed margin pressures as volatility in bond markets fed through to funding costs. Neobanks and digital-first lenders, however, were seen as more resilient thanks to leaner operations and continued growth in customer adoption. Fintech investors expect the sector could even benefit if looser monetary conditions emerge.
Geopolitical backdrop adds to uncertainty
The development coincides with tense Western discussions over Ukraine’s long-term security guarantees, with Moscow warning such talks are meaningless without its participation. The dual shocks of political risk in Washington and geopolitical instability in Europe have reinforced safe-haven demand, keeping markets on edge.
REFH – Newshub, 26 August 2025
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