Global financial markets were jittery on Tuesday as Asian shares fell, the US dollar weakened and US bond yields rose, following President Donald Trump's controversial threat to impose tariffs on Europe in a bid to take over Greenland.
Fears of a renewed trade war have investors turning to safe havens such as gold and the Swiss franc.
This has revived the "Sell America Trade", in which investors sell US stocks, bonds and currencies.
Asian shares fell, with the MSCI Asia-Pacific index down 0.44% and Japan's Nikkei down 0.8%. The US dollar also weakened, while the US 10-year bond yield rose to 4.265%, its highest in more than four months.
In Europe, concerns have been mounting after Trump called into question the existing trade deal.
Investment bank Citi has downgraded European stocks, warning that tariff uncertainty could hurt corporate profits in 2026.
The focus now shifts to the World Economic Forum in Davos, where Trump is expected to meet global business leaders on Wednesday. His remarks could set the market’s course for the future.
Meanwhile, Japan’s Nikkei fell 0.8% and the yen was at 157.92 against the dollar ahead of the election, as investors weighed Sanae Takaichi’s plans to cut taxes and increase spending.
In commodities markets, gold prices remained near an all-time high at $4,670 an ounce, buoyed by demand for safe havens amid global uncertainty.
