A person walks in front of an electronic stock board showing Japan's Nikkei index at a securities firm Tuesday, Aug. 26, 2025, in Tokyo. (AP Photo/Eugene Hoshiko)2025-08-26T02:41:55Z TOKYO (AP) Shares sank Tuesday in Europe and Asia after President Donald Trump announced he was firing Federal Reserve Governor Lisa Cook. The announcement came after trading closed Monday on Wall Street, where benchmarks reversed some of their big gains from notched last week on hopes for interest rate cuts from the Fed. Trump said in a letter posted Monday on his Truth Social platform that he was removing Cook because of allegations that she committed mortgage fraud.Its an unprecedented move that marks a sharp escalation in Trumps battle to exert greater control over what has long been considered an institution independent from day-to-day politics. Apart from rattling financial markets, it is likely to touch off an extensive legal battle that will probably go to the Supreme Court.Trumps decision to remove a sitting Fed governor has shaken confidence in the institution that underpins the worlds financial system, Nigel Green of the financial advisory deVere Group, said in a commentary. Investors are reacting because the independence of the central bank is critical to market stability, and any sign of political capture raises alarm bells everywhere. In early European trading, Germanys DAX lost 0.5% to 24,148.16, while the CAC 40 in Paris slumped 1.6% to 7,716.55. Britains FTSE 100 gave up 0.6% to 9,269.40. The futures for the S&P 500 and the Dow Jones Industrial Average were 0.1% lower. In Asian trading, most benchmarks declined. Japans benchmark Nikkei 225 dove nearly 1.0% to finish at 42,394.40. Australias S&P/ASX 200 declined 0.4% to 8,935.60.South Koreas Kospi lost 1.0% to 3,179.36 after data showed improved consumer sentiment, strengthening expectations that the central bank wont lower interest rates. Hong Kongs Hang Seng shed 1.2% to 25,524.92, while the Shanghai Composite slipped 0.4% to 3,868.38. On Monday, the Wall Street, the S&P 500 fell 0.4%. The Dow industrials closed 0.8% lower and the Nasdaq composite shed 0.2%. Trump has repeatedly attacked the Feds chair, Jerome Powell, for not cutting its short-term interest rate, and even threatened to fire him.Wall Street is still overwhelmingly betting that the Fed will cut interest rates at its next meeting in September. Traders see an 84% chance that the central bank will trim its benchmark rate by a quarter of a percentage point, according to data from CME Group.In other trading early Tuesday, benchmark U.S. crude lost $1.09 to $63.71 a barrel. Brent crude, the international standard, declined $1.02 to $67.20 a barrel. The U.S. dollar edged down to 147.62 Japanese yen from 147.77 yen. The euro rose to $1.1637 from $1.1620. ___Yuri Kageyama is on Threads https://www.threads.com/@yurikageyama YURI KAGEYAMA Kageyama covers Japan news for The Associated Press. Her topics include social issues, the environment, businesses, entertainment and technology. twitter instagram facebook mailto