FTSE 100 Today, Jan 12, 2025: Stocks Edge Lower as DOJ Launches Criminal Probe Into Fed Chair Powell
On January 12, 2026, the FTSE 100 opened lower in London as global markets reacted to a big shock from the United States. Investors woke up to news that the U.S. Department of Justice has launched a criminal investigation into Federal Reserve Chair Jerome Powell.
Powell revealed that the Justice Department served the Federal Reserve with grand jury subpoenas and threatened a criminal indictment over his testimony before Congress. This rare move has shaken market confidence. It has also raised fresh fears about political pressure on the central bank.
The story is now the main driver of early market moves in Europe. The FTSE 100, which had been climbing last week, slipped as traders priced in uncertainty.
This article will explain what happened, why it matters, and how markets are reacting.
What Happened: DOJ Launches Criminal Probe Into Fed Chair Powell
On January 12, 2026, the U.S. Department of Justice opened a criminal investigation into Federal Reserve Chair Jerome Powell. The probe began after Powell disclosed that the DOJ served grand jury subpoenas to the Federal Reserve. The subpoenas threaten a criminal indictment linked to Powell’s testimony before Congress in June about the Fed’s $2.5 billion renovation of its headquarters. Powell said this action is “unprecedented” and could weaken the central bank’s long‑standing independence.
In statements, Powell framed the subpoenas not as a genuine legal case but as a broader attempt to influence Fed policy. He argued that the pressure campaign is tied to disagreements over interest‑rate decisions and political frustration with the Fed’s cautious approach.
President Trump denied direct involvement in the investigation but criticized Powell’s performance at the Fed. The legal threat has reverberated through global markets because the Fed’s autonomy is central to investor confidence.
Immediate Market Impact: FTSE 100 and European Markets
On January 12, 2026, European markets, including the FTSE 100, moved lower at the opening bell as traders absorbed the news of the DOJ’s action against Jerome Powell. In London, the FTSE 100 was down modestly on a day that had begun with risk‑off sentiment across global equities.
In the U.S., stock futures for major indices, Dow Jones, S&P 500, and Nasdaq 100 all drifted lower overnight. Futures for the Dow were off about 0.4% to 0.5%, while the S&P and Nasdaq dropped roughly 0.5% to 0.9%, reflecting investor unease ahead of the European opening.
This reaction occurred even after the markets had rallied to fresh highs the previous week. The sudden shift shows how political or institutional risk can quickly erase optimism. Many traders saw the probe as a negative catalyst that could raise volatility and cloud expectations for monetary policy.
Sectors sensitive to economic growth and financial confidence, like banking and consumer services, bore much of the early selling pressure. Meanwhile, certain defensive assets began to attract capital.
Global Market Ripples: U.S., Asia, and FX Markets
The DOJ’s investigation into Powell had a global impact on markets on January 12, 2026. In the U.S., futures for the S&P 500 and Dow continued to fall in early trading, showing that American equities were not immune to the shock.
Over in Asia, stock markets responded differently. While U.S. stock futures weakened, several Asian benchmarks posted gains as investors interpreted regional data and policy signals separately from U.S. political risk. This divergence underlines how markets weigh local conditions against global headlines.
Currency markets were also affected. The U.S. dollar weakened against major peers, with the dollar index slipping as confidence in U.S. policymaking faltered. The euro and yen strengthened as traders moved away from the greenback.
Safe‑haven assets saw strong inflows. Gold prices surged to record levels, topping previous highs as investors sought shelter from market risk and political instability. Silver and other precious metals also rose sharply.
These mixed signals across markets show that investors were balancing risk avoidance with ongoing economic fundamentals.
Deeper Implications: Fed Independence, Policy, and Rate Outlook
The criminal probe into Jerome Powell raised deep concerns about the independence of the Federal Reserve. Central bank autonomy, the idea that monetary policy should be free from political control, is a cornerstone of modern markets. The DOJ’s action challenged that assumption.
Powell’s statements stressed that the subpoenas were unrelated to misconduct and instead stemmed from political disputes over interest rates. He warned that such pressure could force rate decisions to be made for political reasons rather than economic data, a prospect that unsettled investors globally.
This dynamic matters for markets because interest‑rate expectations help shape valuations for stocks, bonds, and currencies. If the Fed’s independence erodes, markets may demand higher risk premiums or adjust forecasts for future rates.
Some analysts also pointed to the proximity of the next Fed meeting at the end of January. The probe could complicate Fed communication and increase uncertainty about future rate moves. Investors now watch not just economic data but also political developments as key market drivers.
What does this mean for UK Investors?
For UK investors, the Powell news added a layer of risk to already active markets on January 12, 2026. The FTSE 100, which had been strong recently, saw selling pressure as global risk sentiment shifted. European markets often follow U.S. cues, and uncertainty in U.S. policy can lower risk appetite.
The weaker U.S. dollar also influences the British pound and other currencies. A softer dollar can make British exports cheaper overseas, but it may also weaken the outlook for UK companies with large U.S. exposure.
Safe‑haven flows into gold and other defensives may benefit certain UK‑listed mining stocks. But banks and industrial firms may underperform if volatility rises.
Investors who watch trade balances, inflation expectations, and cross‑border capital flows will find the current environment more complex than usual.
Near‑Term Trading Watchlist
Traders on January 12, 2026, should focus on a few key catalysts. Upcoming U.S. inflation data and corporate earnings could either soothe markets or deepen the sell‑off. Recent jobs and consumer figures have been mixed, and fresh data will help shape rate expectations.
With central bank meetings on the horizon, any hints about policy shifts, especially from the Fed, will be crucial. Geopolitical developments also remain a wildcard, as global tensions influence investor confidence.
Technical indicators, such as volatility indexes and support levels on major indices, may offer early hints of whether markets stabilize or continue down.
Final Words
On January 12, 2026, the FTSE 100 opened lower as global markets reacted to the unusual criminal probe into Federal Reserve Chair Jerome Powell. This event rattled U.S. stock futures, weakened the dollar, and pushed gold to new highs.
The controversy over Powell’s independence highlights how political risk can quickly alter market sentiment. Investors now watch both economic data and political developments for guidance. The coming days will likely show whether this shock is a short‑term dip or a deeper turning point in global finance.
Frequently Asked Questions (FAQs)
On January 12, 2026, the FTSE 100 opened lower. Investors worried about U.S. Fed Chair Powell’s criminal probe. Markets dropped as uncertainty rose. Financial and cyclical stocks were most affected.
The DOJ probe on January 12, 2026, may increase uncertainty about Fed decisions. No direct rate change yet. Traders fear political pressure could influence future interest rates.
On January 12, 2026, gold rose, and the dollar weakened. Investors moved money to safe assets. The Fed Chair investigation made markets nervous about stability and U.S. policy.
Disclaimer
The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.
