BY COMFORT OGBONNA
Asian stock markets extended their losses for a third consecutive session on Wednesday as escalating geopolitical tensions tied to U.S. President Donald Trump’s threats to acquire Greenland rattled global investors ahead of his closely watched speech at the World Economic Forum in Davos. The renewed uncertainty weighed heavily on risk sentiment, even as a brutal global bond selloff showed tentative signs of easing.
Investor anxiety was amplified by fears of renewed offshore selling of U.S. assets, often referred to as the “Sell America” trade, which first emerged after last year’s “Liberation Day” tariff announcements in April. Those concerns intensified after Wall Street suffered a sharp overnight selloff, with major U.S. equity indexes plunging more than 2%, while the U.S. dollar recorded its steepest single-day decline in over a month.
The market turmoil sparked a flight to traditional safe havens, sending both gold and silver to record highs as investors sought shelter from mounting political and economic uncertainty. Analysts said the scale of the moves underscored growing unease about the reliability of U.S. policy direction.
According to Mantas Vanagas, a senior economist at Westpac, the “Sell America” trade was the dominant force behind the dramatic market shifts, as investors rushed to cut exposure to U.S. assets amid perceptions that Washington is pursuing policies that could ultimately prove self-defeating. He noted that the U.S. is increasingly being viewed as an unreliable partner by global markets.
Trump, however, showed no sign of softening his stance. He reiterated that there was “no going back” on his goal of controlling Greenland and again refused to rule out the use of force. His renewed threat to impose tariffs on Europe has also revived fears of a broader global trade war, further unsettling investors and straining long-standing alliances.
The European Union is set to convene an emergency summit in Brussels on Thursday to address the situation, highlighting the seriousness of the rift and the risk posed to the decades-old U.S.–EU partnership. With diplomatic tensions escalating, attention has turned to Trump’s upcoming address in Davos, where markets are bracing for further policy signals.
In early Asian trading, MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.3%. Japan’s Nikkei dropped 1.2%, marking its fifth straight day of declines as concerns over global growth and domestic bond market volatility continued to weigh on sentiment.
U.S. equity futures offered limited relief. Nasdaq futures and S&P 500 futures edged up 0.2% after Wall Street’s biggest daily drop in three months. Overnight, the S&P 500 slid 2.06%, while the Nasdaq Composite tumbled 2.4%, reflecting widespread selling across technology and growth stocks. European equity futures also pointed lower, with both EURO STOXX 50 and DAX futures down 0.4%.
Bond markets, which have been rocked by a sharp selloff, showed early signs of stabilization. The rout had been driven by a potent mix of worries over exposure to U.S. assets and a surge in Japanese government bond yields. In Japan, concerns about increased government spending under Prime Minister Sanae Takaichi had pushed yields to record highs, exacerbating global bond market stress.
On Wednesday, investors appeared to pause for breath. The yield on Japan’s 40-year government bond fell 6 basis points to 4.145% after jumping 26 basis points a day earlier to a record 4.215%. Despite the pullback, liquidity across other maturities remained thin, suggesting continued fragility in the market.
U.S. Treasury yields were also relatively steady. The benchmark 10-year yield eased by 1 basis point to 4.285% after surging overnight to a five-month high of 4.313% amid “Sell America” concerns. Adding to the pressure, Danish pension fund AkademikerPension said it would sell its roughly $100 million holding of U.S. Treasuries by the end of the month, citing worries over weak U.S. government finances.
In currency markets, the U.S. dollar stabilized at 98.56 against a basket of major peers after falling 0.5% overnight, its largest daily drop since early December. The Japanese yen held steady at 158.19 per dollar but weakened on several cross rates, while the Swiss franc surged to a record high of 200.19 yen, underscoring demand for perceived safe-haven currencies.
Attention is also turning to monetary policy in Japan, with the Bank of Japan set to meet on Friday. While no immediate rate hike is expected, investors believe policymakers could signal a move toward tightening as early as April, adding another layer of uncertainty to global markets.
In commodities, oil prices fell as concerns over geopolitical tensions and expectations of rising U.S. crude inventories outweighed the impact of a temporary halt in output at two major fields in Kazakhstan. U.S. West Texas Intermediate crude for March delivery dropped 1.31% to $59.57 a barrel.
Meanwhile, precious metals continued to shine. Gold climbed 0.8% to a fresh record high of $4,806 an ounce, while silver gained 0.4% to $95.01, just shy of the record peak of $95.87 reached a day earlier, reflecting sustained demand for safety amid deepening global uncertainty.
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