Global financial markets came under renewed pressure on Tuesday as stocks fell, the U.S. dollar weakened, and Treasury yields climbed to four-month highs, following President Donald Trump’s renewed push to take control of Greenland, a move that has unsettled investors and revived geopolitical and trade concerns.
Equities slid sharply after Trump threatened to impose additional tariffs on European countries if negotiations over Greenland fail, reigniting talk of a so-called “Sell America” trade. The strategy, which gained traction after Trump’s sweeping “Liberation Day” tariffs last April, typically sees investors dumping U.S. stocks, the dollar and Treasuries in favour of safer assets.
That trend appeared to gather pace during Asian trading hours. Nasdaq and S&P 500 futures dropped more than 1%, while the dollar extended losses for a second straight session. At the same time, the yield on the benchmark 10-year U.S. Treasury note rose to 4.265%, its highest level since early September, reflecting investor unease and rising risk premiums.
European markets also pointed to a weaker open, with futures down 0.27%, following a 1.2% decline in the pan-European STOXX 600 index on Monday. In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.24%, drifting further from the record highs reached last week.
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As risk appetite faded, investors moved into traditional safe-haven assets. The Swiss franc strengthened, hitting a one-week high against the dollar, while gold surged above $4,700 per ounce, setting another record and pushing its monthly gains beyond 9%.
Kyle Rodda, senior market analyst at Capital.com, said markets are hoping the rising tensions may ultimately curb further escalation. “There’s hope that this will be self-limiting if markets send a signal that these actions are bad for investors and the economy,” he said, warning, however, of the risk of a prolonged and disruptive standoff between the United States and the European Union.
Attention is now turning to the World Economic Forum in Davos, where Trump has said the United States would discuss the possibility of acquiring Greenland. His remarks have triggered strong resistance in Europe and cast fresh doubt on the durability of trade agreements reached since his return to the political spotlight.
“Even if there is some de-escalation, this episode will still cause many to question the credibility of any deal with Trump,” said Henry Cook, Europe economist at MUFG, noting that tariff-related uncertainty is likely to remain elevated. Reflecting the rising risks, Citi downgraded European equities to “neutral” from “overweight.”
In currency markets, the dollar index, which tracks the greenback against six major currencies, fell 0.18% to 98.912. The Swiss franc continued to benefit from safe-haven demand after gaining 0.7% in the previous session.
Japan Bond Sell-Off Deepens
Meanwhile, Japanese markets faced their own turbulence. The Nikkei index fell 0.8%, while the yen traded flat at around 158.08 per dollar as investors looked ahead to next month’s election. Prime Minister Sanae Takaichi is seeking voter support for increased government spending and tax cuts.
The bond market, however, bore the brunt of investor anxiety. A sell-off across the Japanese government bond curve pushed both short- and long-term yields to record highs, amid concerns that proposed tax cuts, supported by both the government and opposition parties, could further strain Japan’s already fragile public finances.
Demand weakened at an auction of 20-year Japanese government bonds, sending yields on the notes to a record 3.35%. Charu Chanana, chief investment strategist at Saxo in Singapore, said the weak auction reflected investor demands for a higher “fiscal premium.”
“This is why the long end of the curve is driving yields higher and steepening the curve,” she explained. “It’s not a growth-led story, but one driven by debt supply and political uncertainty being priced in.”
Overall, markets remain on edge as geopolitical tensions, fiscal worries and trade uncertainty combine to cloud the global economic outlook.
Esther Ososanya is an investigative journalist with Pinnacle Daily, reporting across health, business, environment, metro, Fct and crime. Known for her bold, empathetic storytelling, she uncovers hidden truths, challenges broken systems, and gives voice to overlooked Nigerians. Her work drives national conversations and demands accountability one powerful story at a time.
