Stocks drop as tumbling metals fuel global selloff
Global stock markets declined as a sharp downturn in gold and silver prices intensified a widespread retreat from riskier investments.
The S&P 500 was poised for a 0.7% lower opening after previously falling up to 1.5%. Gold is on track for its most severe three-day decline since 1980, with its record-breaking surge reversing rapidly. Silver losses widened to 40% over the same timeframe.
Treasuries saw slight gains, as the yield on the 10-year note decreased by two basis points to 4.22%. The dollar maintained its advances from Friday. Bitcoin stabilized around $77,000 after a selloff over the weekend.
“Markets are nervous,” stated Ulrich Urbahn, head of multi-asset strategy and research at Berenberg. “We are witnessing a broad-based selloff in Asian, European, and US markets. The rising volatility in gold and silver is forcing investors to reduce risk.”
The MSCI All Country World Index dropped 0.5%, while its Asian benchmark fell 2.1%. South Korea’s Kospi index—a key indicator for the AI sector—tumbled 5.3%. Declines in European equities were less pronounced.
Monday’s trading reflects growing instability following an extended rally in metals and repeated stock market highs, fueled by massive AI investments. Concurrently, investors are reevaluating asset prices and adjusting their expectations for monetary policy with a potential Federal Reserve chairmanship under Warsh.
The nomination of Warsh—an economist noted for his strong criticism of the central bank as well as his policy views—has quickly moved the discussion away from short-term interest rates and toward the Fed’s balance sheet and its fundamental market role.
Pending Senate confirmation, the former Fed governor would take over from Jerome Powell when his term concludes in May. Warsh, 55, publicly advocated for lower interest rates in 2025, aligning with Trump and contradicting his established image as an inflation hawk. The U.S. president said on Friday he did not request a commitment to rate cuts from Warsh.
“Investors are concerned about the ‘higher for longer’ interest rate scenario,” commented Francis Tan, Asia chief strategist at Indosuez, regarding U.S. rates. “Yet, market uncertainty stems from whether Trump will pressure Warsh to push a more dovish policy stance. This is driving volatility across different assets and regions.”Play Video
Technology sector losses followed comments from Corp. CEO Jensen Huang, who characterized the company’s proposed $100 billion investment in OpenAI as “a commitment” and stated the firm would evaluate future funding rounds individually.
“Jensen’s remarks probably affected short-term market sentiment, especially for AI-related stocks that had seen significant gains,” said Gary Tan, a portfolio manager at Allspring Global Investments. “The comments mainly acted as a trigger for profit-taking, leading to an unwinding of concentrated market positions.”
In political developments, the U.S. government entered a Saturday, awaiting House approval of a funding agreement negotiated by Trump with Democrats after nationwide protests over the killing of a U.S. citizen in Minneapolis by Border Patrol agents.
Brent crude as much as 7.4%, while dropped over 5%.
“Market sentiment has become defensive—though this is more about reducing risk exposure than outright panic,” observed Billy Leung, an investment strategist at Global Management. “The overall mood is weak.”