Market Reactions and Key Developments
A look at the day ahead in European and global markets from Stella Qiu. Wall Street’s reaction to Trump’s Greenland move has been negative, with all three U.S. equity benchmarks experiencing their worst one-day falls in three months. The dollar also slumped by the most in a month, while Treasuries suffered, with the 30-year Treasury yield racing towards the 5% danger zone.
Recent Market Trends
The recent market trends have brought back memories of the "Sell America" trade. However, the question on everyone’s mind is whether Trump will change his stance, similar to what he did with his tariffs last April. Despite his claims that there’s no going back on Greenland, markets are hopeful that this is just a negotiating tactic and that he might choose to de-escalate during his speech in Davos.
Global Market Response
The uncertainty surrounding Trump’s plans has caused a significant impact on global markets. Wall Street futures edged up 0.3% in Asia, while Treasuries steadied. The selloff in regional stocks also slowed, helped by gains in Chinese shares, while Japan’s Nikkei narrowed its losses to 0.5%. European bourses are set for a muted open, with EURO STOXX 50 futures down 0.1%.
Economic Indicators
The rout in global bond markets has paused, providing some relief to investors. The 40-year yield has fallen 6 basis points, after a 26 bps jump on Tuesday. Fears of a massive spending spree under Japanese Prime Minister Sanae Takaichi still remain, drawing criticism from the opposition. Safe-haven gold remains in demand, up 1.5% to break $4,800 an ounce, while platinum crossed $2,500 for the first time.
Upcoming Events
Several key events are scheduled to take place on Wednesday, including:
- Trump’s key address at the World Economic Forum in Davos
- The release of UK CPI for December
- ECB President Christine Lagarde speaking at the World Economic Forum in Davos
- The U.S. Supreme Court hearing arguments over Trump’s effort to oust Fed Governor Lisa Cook
Conclusion
In conclusion, the recent market reactions and key developments have been largely driven by Trump’s comments on Greenland. While there is still uncertainty surrounding his plans, markets are hopeful that he will choose to de-escalate during his speech in Davos. The upcoming events, including Trump’s address and the Supreme Court hearing, are likely to have a significant impact on global markets. As investors continue to navigate these uncertain times, it is essential to stay informed about the latest developments and their potential effects on the market.
