Asian financial markets remained under pressure on Wednesday as geopolitical tensions linked to US President Donald Trump’s comments on Greenland unsettled investors, while volatility in global bond markets and currencies added to risk aversion.
Safe-haven assets surged, regional equities fell, and emerging-market currencies weakened as markets digested a confluence of political and macroeconomic shocks.
Asian markets and global risk sentiment
Asian stocks extended losses for a third consecutive session, tracking a sharp selloff on Wall Street overnight.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.44% in early trade, while Japan’s Nikkei slid 0.38%, marking its fifth straight day of declines.
Markets were rattled by fears of offshore selling of US assets — the so-called “Sell America” trade — which resurfaced after Trump renewed threats related to Greenland and tariffs on Europe.
Wall Street tumbled more than 2% overnight, with the S&P 500 losing 2.06% and the Nasdaq Composite dropping 2.4%.
US stock futures clawed back modestly in Asia, while European futures remained under pressure.
“The ‘sell America’ trade was the driving force behind major market moves overnight, as investors looked to reduce exposure to the US, seen by many as an unreliable partner pursuing self-defeating policies,” said Mantas Vanagas, a senior economist at Westpac.
Amid the risk-off move, investors sought safety in precious metals. Gold rose 2.2% to a record $4,870 an ounce, while silver gained 0.4% to $95.01, just shy of Tuesday’s all-time high.
The global bond rout showed tentative signs of stabilizing after a brutal selloff driven by fears over US assets and surging Japanese government bond yields.
Japan’s 40-year bond yield eased 6 basis points to 4.145% after hitting a record high a day earlier, though liquidity remained thin.
US Treasury yields were steadier, with the 10-year yield slipping 1 basis point to 4.285% after touching a five-month high overnight.
Adding to the unease, Danish pension fund AkademikerPension said it would sell about $100 million of US Treasuries by the end of the month, citing weak US government finances.
In currencies, the dollar steadied after its biggest one-day fall in over a month.
The yen held near 158.19 per dollar, while the Swiss franc strengthened sharply, hitting a record high against the yen.
Greenland’s Prime Minister Warns of Escalation
Political tensions intensified after Greenland Prime Minister Jens-Frederik Nielsen warned that the island must prepare for all scenarios amid Trump’s repeated assertions that the US could take control of Greenland.
“It is not likely that there will be a use of military force, but it has not been ruled out yet.
This leader from the other side has made it very clear that it is not ruled out. And therefore we must of course be prepared for everything,” Nielsen said.
He added that Greenland’s government was preparing an information campaign advising citizens to keep at least five days of food at home, and was forming an emergency response team involving municipal authorities, police, and Denmark’s Joint Arctic Command.
“We must emphasize that we are in a difficult, a difficult time, a stressful time, and we cannot rule out that it can escalate even [to something] worse,” Nielsen said.
Trump has refused to clarify how far he would go, saying: “You’ll find out,” and has threatened tariffs on European countries if they resist US efforts to acquire the island.
Indian Rupee hits record low
In Asia’s currency markets, the Indian rupee fell to a fresh record low of 91.3350 per dollar, extending a six-day losing streak amid foreign outflows and global uncertainty.
“The rupee is getting hit by global uncertainties due to geopolitical developments, in addition to idiosyncratic issues like the US trade deal and capital outflows,” said Madhavi Arora, lead economist at Emkay Global Financial Services Ltd.
Foreign investors have pulled $2.7 billion from Indian equities this month, following about $19 billion of outflows last year.
The Reserve Bank of India has intervened through dollar sales to slow the pace of depreciation, according to people familiar with the matter.
Air Force One delay to Trump’s Davos trip
Trump’s trip to the World Economic Forum in Davos was delayed after Air Force One was forced to return to Joint Base Andrews due to a “minor electrical issue,” according to White House Press Secretary Karoline Leavitt.
The president eventually departed on a replacement aircraft more than two hours later.
The incident renewed attention on the aging presidential fleet, as delivery of new Air Force One jets has been pushed back to mid-2028 following ongoing technical issues with Boeing’s 747-8 program.
As markets await Trump’s speech in Davos, investors remain braced for further volatility driven by geopolitics, trade policy, and global liquidity strains.
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