As the standoff between the United States and Europe over "controlling Greenland" shows no signs of cooling down, Tuesday witnessed a further expansion of the global stock sell-off, while gold and silver hit record highs; simultaneously, Japanese government bonds faced heavy selling pressure that spilled over into global bond markets, also intensifying volatility in risk assets. Market focus shifted to Davos, where corporate executives and policymakers are set to gather, with former President Trump scheduled to speak on Wednesday.
As of the time of writing, Dow Jones futures fell 1.24%, S&P 500 index futures dropped 1.34%, and Nasdaq futures declined 1.65%.
European stocks fell 1.2%, extending losses after the pan-European Stoxx 600 index recorded its worst single-day performance in two months. Earlier, Asian stocks declined by 0.5%.
Following the Martin Luther King Jr. Day holiday, US traders returned to the market on Tuesday to find stock index futures down across the board. Dow Jones Industrial Average and S&P 500 futures fell more than 1%, implying the latter could erase its gains for 2026 year-to-date. Nasdaq 100 futures dropped 1.7%. Major tech stocks like Nvidia and Tesla saw declines in pre-market trading.
The Greenland conflict escalated further.
Former US President Trump's push to "take over Greenland" injected new uncertainty and volatility into the market, rekindling investor concerns about a potential trade confrontation between traditional allies, with little sign of compromise currently visible. Tensions escalated further: overnight, Trump also threatened to impose a 200% tariff on French wine and champagne if President Macron explicitly ruled out joining a US-led peace initiative.
Speaking about the US's interest in purchasing Greenland, Trump stated on Truth Social that the island is "crucial" for US and global security. He said, "There is no turning back."
In a series of social media posts, former President Trump intensified his rhetoric regarding his Greenland plan, stating that the US is the only nation that can ensure peace. This came after days of escalating tensions over Greenland, during which Trump launched a series of tariff threats attempting to force Europe to drop its opposition to the US acquisition of Greenland. This topic has become a central issue at this week's meeting of political and business leaders in Davos, Switzerland.
Before the former president arrived at the Swiss resort, he stated that, following a "very pleasant" call with NATO Secretary General Mark Rutte, he agreed to hold a meeting there regarding Greenland.
The "collapse" in the Japanese bond market spread.
The stock sell-off accelerated noticeably after Japanese long-term government bonds "crashed." Due to investor concerns over proposals by Japanese Prime Minister Sanae Takaichi during her campaign, such as "reducing the food tax," Japanese government bond yields surged significantly. Pressure in the bond market quickly transmitted globally: the 30-year US Treasury yield jumped 9 basis points to 4.93%, hitting a record high, indicating widespread pressure in global bond markets.
Eurozone government bond yields rose in early trading, following US Treasury yields higher, driven by uncertainty surrounding the US's "intent to purchase Greenland." According to LSEG data, the yield on Germany's 10-year Bund rose 2.7 basis points to 2.865%.
KBC analysts noted in a report, "The Greenland crisis will continue to develop this week, but the most attention-grabbing event this morning was actually the intense selling at the long end of the Japanese government bond curve."
Kaspar Hense from BlueBay stated in a report, "If the dispute over Greenland continues to escalate, European Union investors are likely to sell US Treasuries." The dispute could put pressure on global interest rates and also have impacts within the United States.
Ipek Ozkardeskaya, a senior analyst at Swissquote, noted that amid renewed tariff uncertainty and increasing market discussion about Europe potentially "weaponizing" its holdings of US assets to counter Trump's hardline stance on trade and Greenland policy, the US 10-year Treasury yield had already climbed above 4.25%.
She added that Europe holds approximately $10 trillion in US assets, including about $4 trillion in US Treasuries and other bonds. If Europe were to choose to sell these assets, it would leave the US market "without support." Given Trump's intense focus on Wall Street, this might capture his attention. This implies that European investors (both private and public sectors) might be willing to endure financial pain to punish the US.
Nicolas Bickel, Head of Investments at the private bank Edmond de Rothschild, stated, "We are currently in an escalation phase, so markets must react to this situation. The coming days will be filled with uncertainty."
Bloomberg strategists argued, "The message markets are sending to policymakers is very clear: if you plan to increase spending without matching new revenue sources, prepare for significantly higher yields. And, given that the current global bond 'guardians' are exceptionally hawkish, this message will not be diluted even if markets are simultaneously hit by growth concerns stemming from new tariff risks (arising from US demands on Greenland)."
As former US President Trump showed no signs of backing down in his efforts to "control Greenland" and further threatened new tariffs on France, the US dollar fell to its lowest level in two weeks, while foreign exchange hedging costs increased.
"Sell America" returned.
The US Dollar Index slipped to its lowest level since January 6th and was on track for its worst two-day performance in about a month. The Euro rose to near a two-week high, while the Swiss Franc led gains among G10 currencies.
Jim Reid, Global Head of Macro Research and Thematic Strategy at Deutsche Bank in London, wrote in a report, "Markets have already reacted, but clearly there is room for more significant volatility if the rhetoric escalates further."
US Treasury Secretary Bassett called for calm on Tuesday and denied the possibility that Europe would retaliate by selling US Treasuries and other US assets if the Greenland dispute escalated further. Although the probability of such action is low, the fact that investors are now openly discussing this extreme countermeasure itself indicates that "retaliation" is becoming a tail risk for markets and the dollar.
From a flow perspective, options positioning overall leaned towards "shorting the dollar." Data from the Depository Trust & Clearing Corporation (DTCC) showed that since Monday's open, investors have shown a preference for holding long exposure in the Euro and Australian Dollar against the US Dollar.
As capital turned towards safe havens, demand for precious metals surged significantly. Gold broke through $4,700 per ounce for the first time in history, poised for its largest single-day gain since last October; silver also refreshed its historical record.
Geopolitical uncertainty combined with concerns about the impact on central bank independence unsettled investors. Following exceptionally strong performance last year, capital further flowed into precious metals. ING analysts stated, "Amid rising US debt levels and heightened policy uncertainty, investors are favoring gold and silver over currencies and government bonds."
Tech stocks continue to dominate the bull market: the Mag 7 remain the strongest engine.
According to the latest statistical data, Wall Street analysts' full-year 2025 earnings growth expectations for the S&P 500 have significantly increased from the 20.9% year-on-year growth projected on October 17th to the latest growth expectation (25.4% growth) as of January 16th, 2026.
Based on Wall Street analyst expectations, the earnings growth rate for the broad technology sector within the S&P 500 index in 2026 is projected to show a stronger pace of growth compared to the overall S&P 500 earnings.
According to the latest expectations as of last weekend, Wall Street analysts forecast a full-year 2025 earnings growth rate of +25.4% for the broad technology sector within the S&P 500, and anticipate the technology sector's earnings growth rate in 2026 to reach a remarkable +31.1%, significantly higher than the 2025 growth rate and far above the historical average earnings level of the US stock market. The impact of the seven tech giants is the greatest.
The smoke of a tariff war rises again! BofA survey sounds the alarm: nearly half of investors are entering the market "naked."
According to a survey conducted by Bank of America before the escalation of the Greenland situation over the weekend, fund manager sentiment reached its most bullish point since July 2021, while protective positioning against an equity correction plunged to an eight-year low.
BofA strategists noted that in the January survey, a net 38% of respondents expected global growth to strengthen, a figure that surged significantly compared to the previous month. Cash levels have fallen to a record low, while equity allocations climbed to their highest level since December 2024, with 48% of managers being overweight. This pushed the survey's sentiment indicator to its highest point in over four years.
The survey results also pushed Bank of America's "Bull & Bear Indicator" to an "extreme bullish" level.
However, nearly half of the participants stated they had not taken any protective measures against a significant drop in stock prices.
Focus Stocks.
Silver mining stocks surged premarket as spot silver surpassed $95 per ounce. US silver mining stocks rose sharply premarket: the Abrdn Physical Silver Shares ETF rose 6.8%, the Global X Silver Miners ETF rose 6.3%, and the iShares Silver Trust rose 6.7%.
Sports apparel stocks fell broadly premarket, with Nike down over 2%. Nike fell 2.5% premarket, while Under Armour and Lululemon fell 2.8%.
Oracle fell 4% premarket after being sued by bondholders.
Applovin plunged over 11% premarket after short-seller Capitalwatch issued a short report alleging systemic compliance risks and major financial crimes related to the company's core shareholder structure.
RAPT Therapeutics skyrocketed 63.5% premarket after receiving a premium acquisition offer from GlaxoSmithKline.
Critical Metals gained over 12% premarket, continuing its rise, as it will form a joint venture with a Saudi industrial group to expand rare earth supply.
ServiceNow rose over 4% premarket after OpenAI reached an agreement with ServiceNow to use AI agents in business software.
General Motors fell over 1% premarket as the NHTSA launched an investigation into approximately 600,000 of its vehicles regarding engine failure issues.
Ryanair rose over 2% premarket after Elon Musk threatened to acquire the airline and replace its CEO.
Netflix rose 1.2% premarket after revising its acquisition offer for Warner Bros. to be entirely in cash.
South Korea's largest telecom operator, SK Telecom, rose 12.2% premarket after launching a new generation of in-vehicle AI assistants.
Beike rose over 3% premarket, supported by ongoing share buybacks and recent policy tailwinds.
United Microelectronics Corporation surged over 13% premarket as its 28nm SuperFlash® fourth-generation automotive Grade-1 platform commenced production.
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