As the geopolitical turmoil surrounding "Greenland" continues to escalate and Japan's political arena faces a sudden "early election," a double dose of uncertainty hammered risk appetite in Tuesday's Asia-Pacific markets, triggering selling pressure across multiple stock and bond markets.
As the focal point of Asian markets, Japan witnessed a brutal session of simultaneous declines in both stocks and bonds. The Nikkei 225 index fell 1% to 53,045.20 points, with the TOPIX index following suit.
Furthermore, the yield on Japan's 10-year government bond rose by 3 basis points to 2.3%, marking its highest level since February 1999. The yield on Japan's 40-year government bond touched 4%, a first since its issuance in 2007. Yesterday, Sanae Takaichi announced a snap election for Japan's House of Representatives on February 8th, vowing to end excessively tight fiscal policy.
South Korean equities also pulled back, with the KOSPI index dropping 1% intraday. Just yesterday, propelled by expectations of a surge in AI-related capital expenditure, the KOSPI had briefly breached the 4,900-point milestone to set a new record high, boasting a year-to-date gain of 15%. Nomura Securities analysis pointed out that the South Korean stock market is undergoing a classic "chips swap": foreign investors, acting as "smart money," are continuously increasing their positions via ETFs, while retail investors are retreating.
In the commodities sphere, spot silver fell 1.4% intraday, retreating from the historic high of $94.72 per ounce it had previously touched. Spot gold declined in sync, albeit modestly, by 0.4%.
Additionally, the yield on the US 30-year Treasury bond climbed 3.8 basis points to 4.879%, reaching its highest level since early September of last year. The yield on the US 10-year Treasury note also rose to 4.259%, a peak not seen since the beginning of September.
The market's primary source of panic originated from across the Atlantic. On Saturday, Donald Trump explicitly stated that if an agreement for the "complete purchase of Greenland" cannot be reached, the United States would wield the tariff stick.
According to a CCTV news report, US President Donald Trump posted that a 10% tariff would be imposed on eight European nations opposing his acquisition of Greenland, escalating to 25% after several months, and would persist until a deal for the "complete and total purchase of Greenland" is finalized. In response, the eight European countries issued a unified statement, labeling the US tariff threats "unacceptable," with French President Emmanuel Macron stating that if these threats materialize, European nations would respond in a united and coordinated manner.
As a result, US stock futures weakened in pre-market trading, and the risk-off sentiment swiftly transmitted to Asia-Pacific markets. Australia's S&P/ASX 200 index declined 0.46% to close at 8,833.6 points; the tense geopolitical situation has once again put global capital on high alert.
The core catalyst for the market's violent tremors was a重磅 statement from Japanese Prime Minister Sanae Takaichi on Monday. According to a Xinhua News Agency report, Japanese Prime Minister Sanae Takaichi stated at a press conference on the 19th that the House of Representatives would be dissolved on January 23rd, seeking a voter mandate to continue governing, with an election scheduled for February 8th. The current term for members of Japan's House of Representatives was originally set to expire in October 2028.
Takaichi stated bluntly at the press conference: "[We] will end the excessively tight fiscal policy... We must break free from the constraints of excessive tightening and boldly invest in risk management."
Her promised cancellation of the food consumption tax and increased strategic fiscal spending were interpreted by the market as signals of aggressive fiscal expansion. This directly led to massive selling of Japanese government bonds, causing yields to surge across the board.
The sharp rise in bond yields, in turn, placed direct downward pressure on equity valuations. Although Takaichi attempted to stimulate the economy through her proposed policies, investor concerns over fiscal sustainability temporarily gained the upper hand.
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