The US market opened slightly down. Why Trump's blow to the Fed doesn't scare traders?

U.S. stocks at the opening of trading on August 26 went into a small minus. Investors reacted with restraint to President Donald Trump's unexpected decision to fire one of the central bank governors. This may be due to the fact that the market is mostly expecting a Fed rate cut at the next meeting, which is exactly what Trump wants.

The main index of the U.S. market S&P 500 at the beginning of trading fell by 0.1%. The blue-chip index Dow Jones Industrial Average was falling by 0.2%. The Nasdaq Composite index was virtually unchanged. The VIX index, which is also called the "Wall Street fear index", was gaining 3% at the moment.

Asian markets ended the day with a decline. The Hang Seng index in Hong Kong fell by 1.2%, CSI 300 and Shanghai Composite indices lost 0.4%. Japan's Nikkei 225 index fell by 1%.

All major European stock exchanges traded in the red zone. The pan-European index STOXX 600 fell by 0.8%. Investors in France staged the strongest sell-off: the CAC 40 index lost more than 2%, while the country's bonds sagged amid the risk of government resignation.

On the eve of US President Donald Trump increased pressure on the central bank. He announced that he was firing Fed Governor Lisa Cook, whom his supporters accuse of alleged mortgage fraud. Cook herself responded that Trump had no grounds or authority to fire her and that she intended to fulfill her duties.

Wall Street has repeatedly warned that the Trump administration's crackdown on the Fed could destabilize financial markets and cause a flight from U.S. assets such as the dollar and Treasuries. Therefore, investors' subdued reaction to Cook's firing came as a surprise to traders, The Wall Street Journal noted.

The reason could be that in recent days the market has already become more attuned to the imminent Fed rate cut sought by Trump, Florian Yelpo, a manager at Lombard Odier, told the publication. After Fed Chairman Jerome Powell gave soft signals in Jackson Hole late last week, investors stepped up bets on monetary easing.

"As serious a conflict between Trump and the Fed as there might have been, it may no longer be there now," said Capital Economics analyst Thomas Matthews. - Trump is looking to push them to take a step they were probably going to take anyway - a rate cut."

Investors are waiting for Nvidia's financial results to be released on August 27. Shares of the leader in the field of chips for artificial intelligence continue to grow in trading on Tuesday. Additional impetus to investor optimism was given by the data on orders for durable goods, which turned out to be better than forecasts, CNBC notes.

This article was AI-translated and verified by a human editor