Asian markets sink, silver hits record as Greenland fears mount
A visitor walks past Japan's Nikkei stock prices quotation board inside a building in Tokyo, Japan, on Feb 19, 2024. (File photo: Reuters/Issei Kato)
HONG KONG: Asian markets extended losses on Tuesday (Jan 20) and silver hit a fresh peak on fears of a United States-European Union trade war fuelled by President Donald Trump's tariff threat over opposition to his grab for Greenland.
After a bright start to the year fuelled by fresh hopes for the artificial intelligence sector, investors have taken fright since the US president ramped up his demands for the Danish autonomous territory, citing national security.
With Copenhagen and other European capitals pushing back, Trump on Saturday said he would impose 10 per cent levies on eight countries - including Denmark, France, Germany and Britain - from Feb 1, lifting them to 25 per cent on Jun 1.
The move has raised questions about the outlook for last year's US-EU trade deal, while French President Emmanuel Macron has called for the deployment of a powerful, unused instrument aimed at deterring economic coercion.
In response, US Treasury chief Scott Bessent said Monday that any retaliatory EU tariffs would be "unwise".
The prospect of another trade standoff between two of the world's biggest economic powers has fuelled a rush to safety and dealt a blow to risk assets.
Silver hit another record high, touching US$94.73 in Asian trade, while gold held just shy of its own peak hit on Monday.
Meanwhile, Treasury yields rose amid a move out of US assets fuelled by the uncertainty sparked by Trump's latest volley.
After hefty selling in Europe, Asian equities extended losses.
Tokyo, Hong Kong, Shanghai, Sydney, Seoul, Singapore, Taipei, Manila and Wellington were all down.
Investors are now watching Davos, Switzerland, where Trump is expected to give a speech to the World Economic Forum.
"Davos now becomes the theatre that matters. Not for soundbites, but for whether the adults step back into the room," wrote Stephen Innes of SPI Asset Management.
"If this turns sour, volatility will not stay bottled. What would normally be a Ukraine-focused week risks being hijacked by a far more destabilising question, namely, whether the transatlantic alliance is being stress-tested in public.
"A NATO fracture, even a rhetorical one, is not something markets are trained to shrug off."
