From Stocks to Safe Havens: How Political Risk Is Reshaping Markets

published at 01.13.2026

Global markets began the week under pressure after news emerged that the US Department of Justice had opened a criminal investigation into Federal Reserve Chair Jerome Powell. The move is widely seen as an escalation in President Donald Trump’s long-running dispute with the central bank. As political risk increased, investors reduced their exposure to equities and shifted toward safer assets.

 

US stock futures fell sharply on Monday. Dow Jones futures declined by around 0.7%, while S&P 500 and Nasdaq-100 futures dropped between 0.6% and 0.8%. This pullback came after major US indices closed at record highs late last week.

Renewed tension between the White House and the Federal Reserve made investors more cautious, particularly following mixed economic data, including weaker-than-expected non-farm payrolls. Shares of major banks such as Citigroup, JPMorgan, Bank of America, Goldman Sachs, and Capital One fell notably in early trading. Market sentiment was also hit by Trump’s proposal to cap credit card interest rates at 10% for one year. Critics warn that such a cap could reduce lending, hurt bank profits, and limit access to credit for both consumers and businesses.

Against this backdrop, investors turned to traditional safe-haven assets. Gold prices rose by more than 2%, reaching a record high of $4,600 per ounce, while silver also climbed to new highs. The US dollar weakened and market volatility increased. At the same time, rising tensions in Iran added to global concerns, with reports of violent crackdowns on protests and comments from Trump suggesting that military options were being considered.

 

Meanwhile, in Europe, London’s FTSE 100 was flat by midday, supported by strong gains in mining stocks as prices for precious metals and copper advanced. In corporate news, Abivax shares jumped on takeover speculation, while several UK-listed companies saw sharp moves following earnings updates, management changes, and analyst upgrades or downgrades.

 

Markets are now facing a combination of political risk, economic uncertainty, and geopolitical tension. While equities may remain volatile in the short term, the strong shift toward gold, silver, and industrial metals highlights where investors are seeking stability. A cautious investment strategy may focus on diversified exposure, including an allocation to precious metals or mining stocks as a hedge against political and monetary uncertainty, while waiting for clearer signals on interest rates and global risks.

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