North American Morning Briefing: Stock Futures Fall, Gold Hits Record on Fed Concerns

Summary:

U.S. stock futures slid amid a probe into Fed Chair Powell and rising Iran tensions, driving investors to safe havens as gold hit records, silver surged, and the dollar weakened.

OPENING CALL

Stock futures were down on Monday following news of prosecutors investigating Federal Reserve Chair Jerome Powell as well as escalating tensions in Iran.

The weekend's developments will force the market to "grapple with fresh political turbulence and rising geopolitical risk," said Hargreaves Lansdown.

Investors turned to safe haven assets, with gold and silver surging to record highs after the news while the dollar fell.

Powell said in a video statement the government investigation is a pretext for Trump's efforts to pressure the Fed to lower interest rates and undermine its independence.

The challenge to the Fed's independence could cause Fed board members to dig their heels in and delay cutting interest rates in order to "defend the institution," ABN Amro said.

Investors also await inflation data due to be released on Tuesday for clues on the possible pace of rate cuts.

Meanwhile, officials said Trump is scheduled to be briefed Tuesday on options to respond to protests in Iran.

The U.S.'s largest banks are also scheduled to report earnings this week, starting with JPMorgan Chase.

Stocks to watch

Allegiant Travel reached a roughly $1.1 billion deal to buy Sun Country Airlines, as budget airlines struggle with competition from bigger rivals. Shares fell 2% offhours, while Sun Country's stock rocketed 16% higher.

American Express, Citigroup, JPMorgan, Bank of America: Shares of the biggest U.S. banks and credit-card companies lost 2% or more ahead of the open.

Exxon Mobil: Trump said he might block the oil company from drilling in Venezuela after Chief Executive Darren Woods described the country as "uninvestible" at present. Shares dropped about 1% premarket.

Synchrony Financial, Capital One Financial: Shares in both companies fell after Trump called late Friday for credit-card interest rates to be capped at 10% for a year.

Walmart will enter the Nasdaq-100 on Jan. 20, Nasdaq said Friday. Shares rose about 2.5% premarket.

Watch For:

World Agricultural Supply & Demand Estimates (WASDE)

Today's Top Headlines/Must Reads:

-For Years, Powell Avoided Fighting Trump. That's Over.

-The Speed-Obsessed Texas Wildcatter in Pole Position for Venezuela's Energy Riches

-Weakened by War, Iran's Regime Faces Its Toughest Challenge Yet

MARKET WRAPS

Forex:

The dollar fell against a basket of currencies.

"The downside risks for the dollar from any indications of further determination to interfere with the Fed's independence are substantial," ING said.

Bonds:

Medium- and long-term Treasury yields extended their rise after the government actions against Powell.

Energy:

Oil prices slipped despite increased supply risks due to escalating protests in Iran and uncertainties over Venezuelan crude exports.

Geopolitical risks are likely to continue driving oil price swings, but a wave of excess supply is expected to keep futures lower this year before a modest recovery in 2027, Goldman Sachs said.

Metals:

Gold prices surged on the back of Powell's criminal probe and as heightened geopolitical risks spurred safe-haven demand .

Increased interference in the Fed could be a "bullish wildcard" for precious metals this year, said Julius Baer.

Phillip Nova said the outlook for gold remains positive over the long term , but risks are higher in the near term due to elevated prices. Gold's long-term bullish case remains well supported by U.S. central bank easing expectations, sustained ETF inflows and resilient physical demand.

Gold chart

Comex gold futures' short-term trend remains bullish, based on the daily chart , RHB Retail Research said.

Silver

Silver rose as worries about the Fed independence grew with geopolitical concerns also supporting prices.

The reaction in precious metal markets seems somewhat outsized , particularly for silver. "We believe that silver's outperformance over gold has become excessive," Julius Baer said.

Copper

Copper prices climbed, holding above the $13,000-a-ton mark on persistent concerns over tightening supply and tariff uncertainty in the U.S.

Iron

Iron ore prices were higher in early trade amid stable demand. The demand for molten iron has rebounded and has further room to rise, Nanhua Futures said.

TODAY'S TOP HEADLINES

Heineken CEO Dolf Van Den Brink to Step Down

Heineken said Chief Executive Dolf van den Brink plans to step down at the end of May after almost six years at the helm, leaving the world's second-largest brewer searching for a new leader at a challenging time.

His departure comes as the Dutch brewer struggles with weakening demand and changing consumer preferences. Beer sales are falling and the company cut guidance twice last year in response to weak consumer sentiment.

Abivax Surges on Report Ely Lily is Preparing $17.5 Billion Bid

Shares in Abivax surged on a report that Eli Lilly was ready to offer 15 billion euros ($17.45 billion) for the biotech startup.

Stock in the French company rose 22% in early European trading to 120.80 euros after climbing as much as 30% earlier in the session. It has a market capitalization of around 7.78 billion euros.

Trump 'Inclined' to Keep Exxon Out of Venezuela

WASHINGTON-President Trump said he might block Exxon Mobil from drilling in Venezuela after the company's top executive publicly acknowledged the barriers involved in doing business in the country.

"I'll probably be inclined to keep Exxon out," Trump said Sunday evening, speaking to reporters traveling with him aboard Air Force One.

Allegiant Travel to Buy Sun Country Airlines for About $1.1 Billion

Allegiant Travel reached a roughly $1.1 billion deal to buy Sun Country Airlines as budget-focused U.S. airlines struggle with stiff competition from larger rivals.

The proposed cash-and-stock deal would bring together two carriers that have primarily served price-sensitive, U.S. vacation seekers at the same time that the industry has come under strain. Larger carriers such as United Airlines and Delta Air Lines have deployed their own bare-bones fares to lure bargain hunters while catering to faster-growing demand from well-heeled travelers willing to pay up for extras.

Gold Breaks Through $4,600 on Fed Concerns, Haven Boost

Gold prices climbed to a record high, breaking above $4,600 a troy ounce as a criminal probe into Federal Reserve Chair Jerome Powell revived concerns over the central bank's independence, while protests in Iran boosted demand for safe-haven assets.

In midmorning European trading Monday, futures in New York rose 2.2% to $4,600.50 an ounce after touching an intraday high of $4,612.70. Silver surged 6.1% to $84.22 an ounce, having hit a record high of $84.69 earlier in the session.

U.S. Prosecutors Are Investigating Fed Chair Jerome Powell

U.S. prosecutors are investigating Federal Reserve Chair Jerome Powell over his testimony last summer about the central bank's building renovation project, according to government officials with knowledge of the matter.

The Fed received grand jury subpoenas from the Justice Department on Friday that threaten a criminal indictment, the Fed chair said in a statement.

U.S. Steps Up Planning for Possible Action in Iran

WASHINGTON-President Trump is scheduled to be briefed Tuesday on options to respond to the protests in Iran, according to U.S. officials, a sign the president is considering reprimanding the regime for its crackdown on demonstrators as he has repeatedly threatened.

The president's planned meeting with senior administration officials will be a discussion about the next steps, which could include boosting antigovernment sources online, deploying secretive cyber weapons against Iranian military and civilian sites, placing more sanctions on the regime and military strikes, the officials said.

U.S. Steps Up Planning for Possible Action in Iran

Democrats See Path to House Control in 2026

WASHINGTON-Democrats are entering the 2026 midterm elections with a clear path to reclaiming control of the House, helped by President Trump's wobbles in his second term, Republican retirements and tight margins across the map that are set to tilt the balance of power in their direction.

Republicans currently hold a 218-213 majority in the House, with four vacancies. That slim edge means Democrats would need a net gain of just a handful of seats to win back the gavel, sharpening focus on a small number of competitive districts likely to decide control of the 435-seat chamber.

South Africa Risks Angering Trump by Hosting Navies of Iran, Russia, China

JOHANNESBURG-South Africa, already on the outs with the Trump administration, is risking further ire from Washington this week by welcoming Iranian, Russian and Chinese warships to its waters.

The naval exercises, which kicked off on Friday, are intended to promote maritime safety, trade and interoperability, according to South African officials. But analysts and opposition politicians say the U.S. president is likely to see the exercises as an intentional provocation.

Russian Flags Proliferate Over Shadow Fleet of Oil Tankers

Source: morningstar

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