The FTSE 100 recovered early losses on Monday as investors fretted about the future of the US central bank following news that the US DOJ will launch a probe into Fed Chair Jerome Powell.
The blow to sentiment weighed on UK stocks, sending London’s leading index sharply lower on the open before the gap was closed. The FTSE 100 was up 3 points at 10,126 at the time of writing.
“Markets dipped as investors feared about the independence of the Federal Reserve,” says Russ Mould, investment director at AJ Bell.
“US prosecutors launched a criminal investigation into Fed chair Jay Powell over a renovation of the central bank’s headquarters. Powell implied the root of the issue was the Fed’s refusal to cut interest rates as fast as Trump wants, rather than any matters involving a building.
“The probe has unnerved markets and raised questions about what might happen to the Fed once Powell steps down in May. There is a fear that Trump is meddling too much with policies that are meant to be set independently.”
Around 60 of the FTSE 100’s constituents were trading negatively at the time of writing.
Barclays was the top faller, losing 3.5%, after Trump said he would cap credit card rates in a move that will damage the profitability of Barclays’ US business.
Russ Mould explained: “Barclays fell 4% after Trump called for a one-year 10% cap on credit card interest rates. The UK bank entered the US credit card market in 2004 with the acquisition of Juniper Financial and it is now one of the largest issuers in the country via partnership brands.”
Mondi shares didn’t fare much better than Barclays, falling 3.2%, after a Morgan Stanley analysts cut their rating on the stock to underweight.
Fresnillo shares jumped to the top of the FTSE 100 leaderboard, up 6.2%, as gold prices soared amid concerns about the Federal Reserve’s independence.
“Gold has surged to a new high on the news, while US futures are weaker,” explained Chris Beauchamp, Chief Market Analyst at IG.
“This certainly wasn’t on our bingo card for 2026, but it represents a major crisis for markets and has the potential to restart worries about the dollar and US monetary policy.”
Gold miner Endeavour Mining rose 2%.
BAE Systems’ good start to 2026 continued with another 2.4% gain amid rising geopolitical tensions.