Good morning and welcome back to the City AM liveblog.
Investors were taking a back seat to risk on Tuesday after President Donald Trump’s latest salvo on the Federal Reserve rocked global markets.
The US Department of Justice opened a criminal investigation into the Fed’s chair, Jerome Powell, as Trump escalated his crusade against the central bank’s independence.
But this sparked thick and fast backlash with the world’s most prominent central bank issuing support of Powell and the Fed’s political independence.
“It is… critical to preserve that independence, with respect for the rule of law and democratic accountability,” read the statement, whose signatories included Bank of England governor Andrew Bailey and European Central Bank president, Christine Lagarde.
Though the tension was enough to send jitters across markets with the FTSE 100 took a tumble in Tuesday’s session before clawing back some gains to end broadly flat at 10,137.5p.
In the US, the sentiment spread with the S&P finishing the day down 0.2 per cent and the Dow Jones 0.8 per cent. The tech-heavy Nasdaq slumped 0.1 per cent.
“Risk sentiment is back on,” Kathleen Brooks, research director at XTB, said.
Though Brooks also noted the “robust defence” of Powell had helped ease some tensions and stabilise sentiment.
“Even President Trump has figured out that you can only push the Fed so far, and has distanced himself from the subpoenas issued to Jerome Powell by the Department of Justice,” she added.
Elsewhere, America’s most influential banker Jamie Dimon sounded alarm to markets, warning some may be under-appreciating current global risks.
The JP Morgan chief renewed warnings around “complex geopolitical conditions, the rise of sticky inflation and elevated asset prices”.
Here’s a few of our top stories from yesterday
Jamie Dimon warns markets are under-estimating global risks
HENRYs set for further Budget blow as more dragged into £100k tax trap
Central banks throw weight behind Fed after Trump assault
Chinese embassy to get green light despite ‘threat to City’
Data centre planning applications rocketed more than 60 per cent in 2025
Labour to unveil new Birmingham-Manchester rail link after HS2 fiasco