Synopsis
Asian markets opened lower on Tuesday. President Donald Trump’s tariff threats regarding Greenland have reignited trade tensions. This has had an impact on investor confidence. European stocks fell significantly on Monday. American markets were closed. Investors are awaiting the European Union’s response to possible American customs tariffs. This situation adds to the existing nervousness in the market.
TIL CreationsThe direction of the market now depends in part on the response of the European Union, which plans to impose tariffs on 93 billion euros ($108 billion) of U.S. products.
Asian stocks fell at the open Tuesday as President Donald Trump tariff threats The Greenland crisis has reignited trade tensions and weighed on investors’ appetite for risk.
Stocks fell slightly in Australia and Japan. On Monday, European stocks saw their biggest decline since November, while U.S. stocks were closed for a public holiday. Contracts for the S&P 500 fell 0.9%. Treasuries fell at the open, with the yield on the benchmark 10-year bond gaining three basis points to 4.26%. Gold and silver were down slightly after closing at record highs.
The yen was stable in early trading Tuesday after Japanese Prime Minister Sanae Takaichi officially called snap elections next month. Investors are impatient ahead of an auction of 20-year Japanese sovereign bonds on Tuesday.
Trump’s threats against countries that oppose his attempt to control Greenland have reignited the debate. market volatility seen at the start of his second term. European resistance and talk of retaliation worsened the sell-off, as investors sought refuge in precious metals amid growing tensions and renewed attacks on the independence of the Federal Reserve.
“The nervousness is palpable,” said Alexandre Baradez, chief market analyst at IG in Paris. “Overall, there are so many problems piling up – from credit cards to Fed independence to tariffs – that I really don’t see the point in the stock markets continuing to break new records.”
The impasse comes as strong earnings and continued investment in artificial intelligence have supported risk appetite. The direction of the market now depends in part on the response of the European Union, which plans to impose tariffs on 93 billion euros ($108 billion) of U.S. products.
French President Emmanuel Macron intended to request the activation of the EU’s so-called Anti-Coercion Instrument, Bloomberg reported over the weekend. German leader Friedrich Merz, however, said on Monday that his country’s greater dependence on exports meant it was less willing to trigger countermeasures.
“With Wall Street shut down, markets have not had the full opportunity to ignore the consequences of the latest escalation in geopolitical risk,” Kyle Rodda, senior analyst at Capital.com, wrote in a note. “There will be a keen eye on Davos, on what the United States is doing and what US President Donald Trump is saying regarding their offer to acquire Greenland.”
Trump is scheduled to address the World Economic Forum in Davos on Wednesday.
In Asia, investors will monitor Japanese sovereign debt on Tuesday after the election announcement. Bond yields jumped Monday as reports of a proposed tax cut renewed concerns about Takaichi’s stance on fiscal policy.
The yield on 30-year debt rose 10 basis points to 3.61%, its highest level since its debut, while yields on 10- and 20-year bonds reached their highest levels since 1999.
The prime minister also said the vote would provide a mandate for fundamental changes to strengthen both economic policy and defense policy, adding that no one will help a country that cannot help itself.
Elsewhere, in further signs of geopolitical tension, China sent a military drone into Taiwanese airspace for the first time, underscoring Beijing’s efforts to test the defenses of self-governed democracy. The Chinese military said on social media that the plane was conducting “legitimate and legal” training.
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