Global markets weakened after US President Donald Trump renewed tariff threats linked to Greenland, bringing trade tensions back into focus.
US government bonds fell across all maturities, while stock markets also moved lower. The yield on the US 10 year Treasury rose to 4.26% as trading resumed after a holiday, and the 30 year bond yield also increased. Asian stock markets dropped around 0.5%, and futures linked to the S&P 500 fell more than 1%. European shares had their biggest decline since November in the previous session.
In currency markets, the US dollar strengthened slightly against most major currencies. Gold and silver slipped after recently hitting record highs. Cryptocurrencies also moved lower, with Bitcoin trading near $92,500.
In Japan, markets remained cautious after Prime Minister Sanae Takaichi officially called an early election for next month. Japan’s 40 year government bond yield rose to 4%, its highest level since the bond was first issued in 2007, as investors waited for a major bond auction.
Market volatility increased after Trump warned of tariffs on countries opposing his efforts to take control of Greenland, prompting resistance from Europe. These concerns have added to investor worries about the independence of the US Federal Reserve and Trump’s push to limit credit card interest rates.
“There is clear nervousness in the market,” said Alexandre Baradez, Chief Market Analyst at IG. He added that with multiple issues such as tariffs, credit-card rules, and central bank independence building up at the same time, it is hard to see stock markets continuing to hit new record highs.
While strong company earnings and ongoing investment in artificial intelligence have supported markets, tensions between the US and Europe are becoming a key risk. The European Union is considering tariffs on €93 billion worth of US goods. French President Emmanuel Macron has supported using the EU’s anti-coercion tool, while Germany has taken a more cautious stance due to its reliance on exports.
Some analysts believe Trump’s policies are making investors hesitant to increase their exposure to US assets, with signs emerging that traders are preparing for a renewed “Sell America” trend.
With US markets closed earlier in the week, investors have not yet fully priced in the latest geopolitical risks. Attention is now turning to the World Economic Forum in Davos, where Trump is scheduled to speak on Wednesday.
In Asia, investors are closely watching Japan’s bond market following the election announcement. Bond yields have continued to rise after reports of possible tax cuts raised concerns about future government spending.
Market Snapshot
Stocks
- S&P 500 futures fell 1%
- Japan’s Nikkei 225 futures dropped 0.9%
- Australia’s ASX 200 declined 0.5%
- European stock futures were slightly lower
Currencies
- The US dollar was mostly steady
- The euro and Japanese yen showed little change
Cryptocurrencies
- Bitcoin fell to around $92,600
- Ethereum moved lower to near $3,180
Bonds
- US 10-year Treasury yield rose to 4.26%
- Japanese and Australian bond yields also increased
Commodities
- US crude oil rose slightly to about $59.70 a barrel
- Gold edged lower after recent record highs
Also Read: Oil Prices Stabilize as Greenland Crisis and Supply Surplus Dominate Focus
