Europe midday: Stoxx extends losses as Trump/Powell spat spooks investors

(Sharecast News) - European shares extended losses on Tuesday and gold hit $3,500 for the first time amid concerns over the US Federal Reserve's independence after attacks on its boss Jerome Powell by President Donald Trump and the lack of progress on tariff negotiations by Washington. The pan-regional Stoxx 600 index was down 0.70% at 502.86 points. Germany's DAX was 0.6% lower, while Britain's FTSE 100 bucked the trend to edge ahead 0.01%.

US indices closed sharply lower on Monday as traders returned from the Easter long-weekend break to an escalation in tensions between the White House and Fed chair Powell over interest rate cuts, with an enraged Trump calling the central bank chief - whom he appointed - a "loser".

At the close, the Dow Jones Industrial Average was down 2.48% at 38,170.41, while the S&P 500 lost 2.36% to 5,158.20 and the Nasdaq Composite saw out the session 2.55% weaker at 15,870.90. Jittery investors took flight from US assets as bonds and the dollar both took a hit, while gold - seen as a safe haven - hit fresh records.

"The tariff tug-of-war still has no end in sight, and now the Powell power struggle is adding more fuel to the fire, with whispers from the White House about his potential ousting rattling already jittery investors. At this rate, even bad news might be seen as a buying signal - if only because something, anything, from Washington might offer a sliver of direction," said Hargreaves Lansdown analyst Matt Britzman.

"Markets are now itching for real progress on trade deals - posts from the President on Truth Social or X just aren't cutting the mustard anymore. Investors want ink on paper, not just words, as a clear signal that movement is happening - and the clock is ticking."

"Gold dazzled past $3,480 per ounce, hitting a record high as fears over trade tensions and political meddling in US monetary policy sent risk appetite packing. Not to be outdone, the yen hit a seven-month high against the dollar, with investors saying yes to safety while turning their backs on shaky sentiment in US assets."

Over the Easter break, Powell said that with elevated uncertainty surrounding the impact of President Trump's recently implemented tariffs on the US economy, he now expects to see inflation rise and growth slow.

Powell said Trump's tariffs were "likely to move us further away" from its goals for "the balance of this year", while Chicago Fed head Austan Goolsbee cautioned that the tariffs will potentially cause the US economy to "fall off" by the summer.

In response, Trump said Powell's termination "can't come fast enough", with White House economic advisor Kevin Hassett stating the administration was currently looking into just that, leading to fresh questions around the central bank's independence.

Trump later demanded that Powell, who he called "Mr Too Late and "a major loser", lower interest rates "NOW".

In equity news, Novo Nordisk shares slumped on news that an experimental pill made by US rival Eli Lily worked as well as the Danish drugmaker's blockbuster drug Ozempic to lower weight and blood sugar in a trial of diabetes patients. The news also knocked Zealand Pharma.

Reporting by Frank Prenesti for Sharecast.com