The market got its wish. Investors breathed a sigh of relief as US President Donald Trump nominated Kevin Warsh for Federal Reserve Chairman. Having served at the Fed from 2006 to 2011, a period that included the global financial crisis, Warsh's central banking experience is recognized by the market, which also believes he will not simply capitulate to Trump's demands, thereby easing anxieties. Richard Saperstein, Chief Investment Officer at Treasury Partners, stated, "Kevin Warsh's nomination for Fed Chair is precisely the outcome the market was hoping for. He is steady, well-known within the industry, and there is an expectation he will uphold the central bank's independence, which is critical for the market." The US dollar strengthened following the announcement of Trump's nomination, highlighting market recognition of Warsh's credibility and anticipated independence. However, risk assets sold off in response, with major US stock indices closing lower on Friday, dragged down by weakness in technology stocks. Commodities suffered a severe setback. As safe-haven assets used to hedge against US market volatility, spot gold and spot silver plunged by nearly 9% and 31.4% respectively on Friday, with silver recording its worst single-day drop since March 1980. The sell-off in the two precious metals continued during Asian trading hours on Monday; as of 2:30 PM Beijing time, gold's losses had widened to approximately 8%, while silver was down around 10.5%. Cryptocurrencies declined in tandem, with Bitcoin's price falling to around $75,103, dropping below the $80,000 mark for the first time since April. Asian markets also came under significant pressure. South Korea's KOSPI index plummeted over 5%, triggering a temporary trading halt; Hong Kong's Hang Seng Index fell nearly 3%, and Japan's Nikkei 225 index retreated about 1%. Oil prices moved lower concurrently, with the international benchmark Brent crude falling 5.3% and US crude dropping 5.5%. However, this oil price volatility stemmed more from Trump telling reporters on Saturday that Iran was in "serious talks" with the US, alleviating market concerns about a disruption in crude supplies. Looking ahead to next week, tech giants Alphabet, Google's parent company, and Amazon are scheduled to report earnings on Wednesday and Thursday respectively, with investors hoping strong results can reverse the current risk-off sentiment in the market.
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