Asian markets opened weaker on Tuesday as renewed trade-war concerns weighed on risk sentiment, while government bond markets in Japan and the United States signaled rising investor unease over fiscal and geopolitical uncertainty.
Developments in China’s consumption policy outlook and fresh remarks from US President Donald Trump on Greenland added to global market jitters.
Asian markets hit by trade-war concerns
Asian stocks fell broadly as investors reacted to escalating trade tensions linked to US policy signals.
MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.24%, moving further away from the record highs reached last week.
Japan’s Nikkei fell 0.9%, while Nasdaq and S&P 500 futures dropped around 1% in early Asian trading.
The dollar remained under pressure, while US Treasury yields climbed, with the 10-year yield rising to 4.265%, its highest level since early September.
Investors sought safe-haven assets such as the Swiss franc and gold as concerns resurfaced about a potential “Sell America” trade, which involves selling US stocks, the dollar, and Treasuries.
The latest bout of volatility was triggered by President Trump’s renewed threats tied to trade and his push to take control of Greenland, raising fears of further tensions with Europe.
MUFG’s Europe economist Henry Cook cautioned against overreaction, saying last year had “taught us not to overreact to Trump’s threats,” but added that uncertainty around tariffs is likely to persist.
“Even if there is de-escalation this episode will still cause many to doubt the credibility of any deal with Trump, and so tariff uncertainty will remain elevated,” Cook said.
Citi downgraded European equities, noting that heightened tariff uncertainty weakens the near-term investment case and clouds prospects for earnings growth in 2026. European futures pointed to a slightly weaker open.
China planning new measures to spur consumption
China’s state planner said the government is preparing new policies for the 2026–2030 period aimed at boosting domestic consumption and addressing what officials described as “prominent” supply-demand imbalances.
“The issue of having strong supply, but weak demand in the current economic operation is indeed a prominent problem,” Wang Changlin, vice head of the National Development and Reform Commission (NDRC), told a press conference.
While officials did not provide detailed measures, they said the services sector would become a central focus.
China’s economy grew 5% last year, meeting the government’s target, supported largely by strong exports that offset weak domestic consumption.
Industrial output rose 5.9% in 2025, compared with 3.7% growth in retail sales, highlighting the imbalance.
“The services sector has now become a key focus in efforts to expand domestic demand,” said Zhou Chen, an NDRC official, adding that sectors such as elderly care, healthcare, and leisure offer significant growth potential.
China has also deployed 62.5 billion yuan ($8.98 billion) in special treasury bond funds to support its consumer trade-in scheme for appliances and new-energy vehicles.
Japan bond yields surge on fiscal concerns
Japanese government bonds sold off sharply as investors reacted to Prime Minister Sanae Takaichi’s proposal to suspend the sales tax on food for two years.
The plan is estimated to cost about ¥5 trillion ($31.6 billion) per year, raising concerns about how it would be funded.
Japan’s 40-year government bond yield rose to 4%, the highest since the maturity was introduced in 2007, while the 10-year yield climbed above 2.3%, its highest level since 1999.
“It remains highly uncertain whether the consumption tax cut can be implemented without relying on government bond issuance,” said Ataru Okumura, a senior interest-rate strategist at SMBC Nikko Securities.
“Markets are becoming more conscious of fiscal expansion,” said Takuya Hoshino, chief economist at Dai-ichi Life Research Institute.
“They are finding it harder to buy when they worry about a possible acceleration of expansionary fiscal policy going forward.”
Masahiko Loo of State Street Investment Management said, “Ultra-long JGB yields are being pushed higher not only by the structural supply–demand imbalance but also by a fresh re-pricing of term and risk premium as markets absorb a more expansionary fiscal stance and persistent inflation.”
Trump continues Greenland rhetoric
President Trump renewed his push to take control of Greenland, dismissing opposition from European leaders and adding to geopolitical unease ahead of his trip to the World Economic Forum in Davos.
“We have to have it. They have to have this done. They can’t protect us,” Trump told reporters, adding of European resistance, “I don’t think they’re going to push back too much.”
President Donald Trump unsettled NATO allies over the weekend after threatening to levy tariffs on several European members of the alliance if he fails to secure control over Greenland.
The remarks drew sharp criticism from European Union leaders, with French President Emmanuel Macron urging the bloc to consider deploying its strongest retaliatory trade mechanism.
Trump also criticized Macron for declining an invitation to participate in a proposed “Board of Peace” and floated the possibility of imposing tariffs of up to 200% on champagne and wine imports.
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