Federal Reserve chair's warnings send US stocks tumbling; Asian markets show mixed reactions

US Wall Street experienced a significant sell-off on Wednesday, accompanied by a declining dollar, following pessimistic remarks from Federal Reserve Chair Jerome Powell and concerns over semiconductor company Nvidia. The market atmosphere shifted from its previous stability, prompting investors to seek refuge in gold, which surpassed $3,300 per ounce.
Despite positive retail sales figures, US equities declined. The downturn intensified after Powell expressed concerns about Trump's tariffs potentially forcing the Federal Reserve to make difficult decisions regarding inflation and unemployment management.
Powell indicated that whilst employment and inflation objectives were currently balanced, policymakers might face a "challenging scenario" as circumstances evolve. "Tariffs are highly likely to generate at least a temporary rise in inflation," Powell told the Economic Club of Chicago, warning that the inflationary effects "could also be more persistent."
US stocks reached their lowest points following Powell's statement, with slight recovery near trading close. The Nasdaq declined over three per cent while closing. Meanwhile, Nvidia shares dropped approximately 7 per cent, having earlier fallen more than 10 per cent. The company revealed potential losses of $5.5 billion related to export licence restrictions for technology potentially utilisable in Chinese supercomputers.
Jack Ablin of Cresset Capital noted that Powell's comments raised stagflation concerns and transformed a moderate decline into a substantial market drop.
The dollar also weakened considerably against the euro following Powell's statements. Forexlive's analysis suggested growing market conviction about US economic deceleration.
Read more: Fed chief Jerome Powell delivers stark warning amid Trump tariffs

Asia-Pacific markets largely advanced on Thursday, diverging from Wall Street's significant decline following Powell's warning about trade tensions potentially impeding the central bank's inflation control and growth objectives. Indian markets, however opened at a low after a strong week. Sensex began the day with a 76.27-point drop at 76,968.02, later plunging over 300 points to 76,675.62 during early trade while Nifty followed, falling over 100 points to 23,298.55.Major losers included HCL Tech, Tata Steel, Tech Mahindra, TCS, L&T, and Titan, while ICICI Bank, HDFC Bank, Bharti Airtel, and SBI saw gains.
Hong Kong's Hang Seng Index gained 1.07% during early trading, whilst Mainland China's CSI 300 declined by 0.41%.
Japan's primary index, the Nikkei 225, increased by around 0.70 %, accompanied by the broader Topix index, which climbed 0.55%. This comes after Japan entered key trade talks with the US as President Trump pushes for quick deals amid global tariff tensions. Trump, directly involved in the negotiations, seeks to reduce the $68.5 billion trade deficit and secure more access for US goods. Japan, facing tariffs up to 25% on cars and metals, is cautious about making concessions.Prime Minister Ishiba’s team hopes for a fair outcome, while Trump also presses Japan on defense cost-sharing. The outcome may shape global trade dynamics as China, facing upto 245% tariffs from US, promotes itself as a more stable partner.
South Korea's Kospi index advanced 0.41%, and the small-cap Kosdaq rose 1.13%, following the central bank's decision to maintain interest rates at 2.75%, aligning with economists' expectations in a Reuters poll.