European stock markets slipped on Tuesday, following a sharp selloff in U.S. assets triggered by President Donald Trump’s renewed attacks on Federal Reserve Chair Jerome Powell. The president’s latest remarks have intensified concerns about political interference in monetary policy, adding pressure to U.S. Treasuries and unsettling investor confidence.
In a Monday social media post, Trump labeled Powell a “major loser” for not cutting interest rates, stoking fears that he might attempt to replace the Fed chief with someone more aligned with his agenda. The backlash contributed to a 2.4% decline on Wall Street and pushed the dollar to a three-year low. Yields on U.S. Treasuries climbed as markets braced for potential changes at the Fed.
Although Trump recently suggested Powell would step down if asked, the Fed chair has indicated he would not resign voluntarily. Legal experts remain uncertain about the president’s authority to dismiss Powell, with unrelated cases being monitored as potential precedents.
The episode has added to already fragile market sentiment, weighed down by the administration’s unpredictable trade policy and erratic tariff announcements. While Asian markets showed some resilience in overnight trading, the impact carried into Europe, where the STOXX 600 was down 0.4% and Germany’s DAX dipped 0.2% by 0909 GMT. The UK’s FTSE 100, however, edged up 0.2%.
Globally, the MSCI World Equity Index slipped less than 0.1%, underscoring a cautious mood among investors.
“The market is very jittery, so any sense of negativity, any sense of worry, just gets escalated or exaggerated,” said Fiona Cincotta, senior market analyst at City Index. “There’s a lot of investor anxiety surrounding the trade war, now heightened by the confrontation between Trump and Powell.”
The U.S. dollar index stabilized at 98.369 after Monday’s drop, while the euro traded slightly lower at $1.1502. “The independence of the Federal Reserve is a cornerstone of the dollar’s credibility,” noted Quasar Elizundia, research strategist at Pepperstone. “The dollar’s status as the ultimate safe-haven asset can no longer be taken for granted; it is being actively challenged.”
Meanwhile, the U.S. 10-year Treasury yield hovered at 4.4125%, showing early signs of stabilization. Demand for safe-haven assets remained strong, helping gold touch a record high of $3,500.05 before easing to $3,455.43, still higher on the day.
Investors will be closely watching corporate earnings this week, with 27% of S&P 500 companies set to report. Tesla, which fell nearly 6% on Monday amid reports of production delays, is scheduled to release results later Tuesday. Alphabet, Google’s parent company, will follow with its earnings on Thursday.