Asian Pacific markets slip

US stock index futures were sharply lower this morning as investors reacted to President Trump’s tariff threat against eight European countries, including the UK. This followed a display of united opposition to the President’s plans for a US takeover of Greenland, a country currently under the protection of Denmark, which is itself a member of NATO and the European Union.

This is turning out to be a somewhat embarrassing diplomatic incident, at least from a European perspective, made acute as many of the participants will be in Davos this week for the World Economic Forum.

This annual yawn fest of mutual backslapping (?) may get a bit spicy this year. Donald Trump is attending and will deliver a speech on Wednesday afternoon. But he’s just as likely to express his thoughts into any microphone that hoves into his orbit. So, this could be a year when it’s worth paying attention to events in Switzerland.  

US stock indices were already on the back foot at the end of last week. The Dow, S&P and NASDAQ closed a fraction down on Friday and posted losses for the week overall.

Source: TN Trader

Investors cut their exposure to equities ahead of the weekend and today’s break for Martin Luther King Day. They were encouraged further after President Trump indicated that he would prefer Kevin Hassett, the current frontrunner to replace Jerome Powell as Fed Chair, to remain in place as Director of the National Economic Council. This means that Kevin Warsh is back as the favourite, and the markets consider him to be less amenable to pressure from the President to cut rates.

Looking ahead, investors are bracing for a busy week. There’s a mix of corporations scheduled to report earnings, including Netflix and United Airlines tomorrow, Johnson & Johnson, Halliburton and Kinder Morgan on Wednesday, with Intel, GE and Procter and Gamble on Thursday. The Fed’s preferred inflation measure, Core PCE, is also released on Thursday.

European stock indices were sharply lower across the board this morning. Markets reacted to President Trump’s threat to escalate tariffs against European allies opposing the US control of Greenland.

The Euro Stoxx 50, German DAX and French CAC were all down well over 1% by mid-morning, in moves which echoed those in US stock index futures. US stock exchanges and bond markets are closed for Martin Luther King Day. The UK’s FTSE 100 held up a bit better with mining stocks in demand, but was still down from Friday’s all-time closing high.

Source: TN Trader

President Trump’s threat includes tariffs starting at 10% in February and rising to 25% by June if a deal is not reached. The tariffs are aimed at Denmark, Germany, France, the UK, Norway, Sweden, the Netherlands and Finland. In terms of severity, economists have calculated that the UK and Germany look likely to take the biggest hits to their respective GDPs.

European leaders were quick to respond, branding the measures unacceptable and reaffirming support for Denmark. The prospect of retaliatory action and a renewed transatlantic trade dispute added to early-session volatility, pushing investors into risk-off mode.

Currency markets reflected growing unease over the increase in geopolitical risk, which came this weekend. President Trump’s fresh tariff threat to his trading partners and NATO allies over Greenland led to a US dollar selloff. The Dollar Index snapped sharply lower to trade back under 99.00, having hit a six-week high at the end of last week.

The Swiss franc was a major beneficiary as investors sought out an FX safe haven. But there was a reluctance to add exposure to the Japanese yen, given the building uncertainty now that Japan's Prime Minister, Sanae Takaichi, has called for a snap election on 8th February. Overall, it is the US currency which is currently absorbing the pressure of rising political risk premia, rather than the euro.

Source: TN Trader

Precious metals surged higher this morning as investors rushed for ‘safety’ on the back of renewed trade tensions. Gold jumped over 1.5% in early trade, to print a fresh all-time high just shy of $4,700. The move was driven by a combination of rising geopolitical risk, trade-war fears and a pullback in the US dollar.

Despite reduced expectations for multiple Fed rate cuts later in 2026, gold’s upward momentum remained intact, supported by a broader loss of confidence in other US assets. The metal continues to attract defensive flows as investors are forced to update their risk outlook across global markets.

Source: TN Trader

Yet again, silver outperformed gold, rallying more than 3.5% to reach its own fresh record highs. It briefly broke above $94 as the Asian Pacific markets opened, rebounding sharply after a pullback towards the end of last week. Prices remain elevated, and there’s scant evidence that buyers are being put off, despite the daily MACD suggesting that silver is very overbought.

The prevailing view amongst the bulls is that silver is in short supply, while demand from both investors and industry remains strong. And, as with gold, this morning’s drop in the US dollar has also added to the general bullishness.

Source: TN Trader

Crude oil prices were relatively steady this morning, but with a negative bias. Front-month WTI fell back towards $58.50 to hit its lowest level since last Monday. After a brief break above key resistance around $61.30 in the middle of last week, front-month WTI has dropped back.

But it has not yet fallen enough to take it back below the upper resistance line of the downtrend, which had been building since the summer. That is the next target as far as the bears are concerned, as they position themselves to take advantage of the longstanding fundamental drivers of plentiful supply and slowing global demand growth.

Source: TN Trader

The Western perception that the horrific outbreak of regime-backed violence against protestors in Iran has now ceased has been partly responsible for the drop in oil prices.

It’s certainly something for which the Trump administration wishes, as the president’s threat of military intervention should the state violence persist was obviously not something that had been planned out fully.

Traders will continue to monitor developments across Persia and the Middle East alongside tariff-related risks that could weigh on global growth expectations.

Natural gas prices gapped higher from Friday’s close, driven by weather-related factors and updated storage data. The move marked a sharp reversal following recent choppy conditions, reinforcing the market’s sensitivity to near-term supply and demand shifts. Volatility remains elevated, with price action widening significantly as traders adjust positioning.

Bitcoin and Ether pulled back from recent highs as investors tempered their risk exposure. This came after President Trump’s tariff threat against eight European countries (including the UK and Germany) in response to their objection to the US taking over Greenland.

US stock index futures sold off this morning in holiday-thinned trading. This saw Bitcoin fall back below $92,000, while Ether dropped towards $3,200. Despite this, both cryptos have seen a series of higher highs and higher lows for the best part of a month now. This is constructive from a bullish perspective.

The VIX spiked up from Friday’s close, reflecting the sudden deterioration in risk appetite following President Trump’s tariff announcement. While equity markets are closed for Martin Luther King Day, futures contracts on the S&P 500 signalled growing concern over renewed trade conflicts. The move exposed the fragile nature of recent calm across risk assets.

With US markets closed today, attention focuses on geopolitics rather than data. Tariffs tied to Greenland dominate headlines, European leaders are pushing back, and US stock index futures point lower. Gold’s surge highlights renewed demand for safety, while risk assets face early pressure.

With earnings season set to broaden later this week and inflation data still looming, markets now face a familiar question: is this a temporary shock, or the start of a more sustained risk repricing?