Equity falls bottom out as Trump heads to Davos for 2nd time after plane issues

Asia market update: JP yields unwind most of their 6-SD move yesterday but Gold keeps powering higher; Equity falls bottom out as hTrump heads to Davos for 2nd time after plane issues.

General trend and developments

- Spot Gold up another 2% to $4,860/oz, Platinum also saw fresh record highs, however Silver notably failed to kick on today, hovering below yesterday’s fresh record highs.

- Global equities bottomed out in Asia today after steep falls Mon and Tues.

- Comes as the Swiss-bound Air Force One carrying Pres Trump had to turn around back to DC after what the White House described as a ‘minor electrical issue’. Trump to head back again to Davos on another plane.

- Japanese bond yields today unwound most of their massive run up yesterday (a 6-standard deviation move) [Yesterday saw especially the long-end 30- & 40-year JGBs up as much as ~30bps, slightly outdoing even the surge in Japanese yields seen in April 2025 following initial imposition of US tariffs. Markets getting used to ultra-long (40-year) Japanese yields standing at levels >4% for first time in decades, with 30-year JGBs not far behind at 3.4%].

- In response, overnight JP Fin Min Katayama spoke from Davos twice, saying confident bond market situation will improve, that fiscal sustainability will be maintained and is focused on higher tax revenues as the economy shifts to growth-oriented mode (away from cost-cutting deflation mode). Reiterated FX intervention against weak Yen remains an option.

- US Treas Sec Bessent also said his piece, urging Japan to address its bond market volatility.

- BOJ results for outright bond buying operation today saw high sell interest for 1-3 year and >25-year maturity ranges

- South Korea yields held onto overnight steep increases.

- South Korea President Lee now seems more cautious on domestic equities vs prior comments [Reminder from Jul 2025: Lee said South Korea to prepare for a "Kospi 5,000 era"]

- Korea also saw further strong exports numbers 20 days of Jan, though heavily reliant on chips, +70% y/y as autos, auto parts and ships all down.

- Lynas CEO said the company was Not seeing disruptions of China rare earths to Japan

- India rupee falls to fresh record low; >91.0 USD

- Taiwan export orders again ripped in December, nearly 44% y/y was the fastest in 5 years.

- Analysts ponder whether Greenland tensions could eventually impact global monetary policies.

- US White House releases Trump's order 'Stopping Wall Street from competing with homebuyers

- No SCOTUS ruling on tariffs or Fed’s Lisa Cook yet.

- Netflix down nearly 5% after hours guiding short of consensus and signs of indigestion on funding the Warner Bros deal.

- US equity FUTs +0.4% during Asia trading

Looking ahead (Asian-weighted focus, using Asian time zone)

- Wed Jan 21st ID Rate Decision, (Wed eve UK Dec CPI)

- Thu Jan 22nd JP Dec Trade Balance, KR Q4 GDP, AU Dec Jobs, (Thu eve US Final Q3 GDP, US Oct + Nov Core PCE)

- Fri 23rd JP Dec CPI, BOJ rate decision, Global PMIs, (Fri eve UK Dec Retail Sales)

Holidays in Asia this week

- Mon Jan 19th US market holiday

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.5% at 8,773

- Australia Dec Westpac Leading Index M/M: +0.10% v -0.02% prior

- Rio Tinto reports Q4 Pilbara iron ore output 89.7 Mt v 86.5Mt y/y, +4%, mined copper output +5% y/y

- LYC.AU CEO: Not seeing disruptions of China rare earths to Japan

- New Zealand Dec Non Resident Bond Holdings: 59.0% v 59.5% prior

- New Zealand PM Luxon: New Zealand's nation is turning in the right direction; Calls for the General Election to be held on Nov 7th

- Fonterra Global Dairy Trade Auction Dairy Trade price index: +1.5% v +3.6% prior [overnight update]

- (AU) AOFM [Australia debt agency]: Prices syndication of A$15B in 4.75% Oct 2037 Treasury Bonds; Real yield to maturity: 4.87%

China/Hong Kong

- Hang Seng opens -0.3 at 26,397; Shanghai Composite opens +-0.3% at 4,103

- China Oil and Gas 603.HK To postpone USD bond issuance [reason not initially disclosed] - financial press

- China said to delay policy rate cuts, 5-Year LPR reduction seen [time frame unspecified] - China Securities Jou

- Reportedly China is seen deepening monetary and fiscal policy coordination - press

- USTR Greer: Highly likely that he and Treasury Sec Bessent will meet their Chinese counterparts before April

- China Vice Premier He Lifeng: Multilateralism and free trade facing serious challenges - Davos comments [overnight update]

- China President Xi: To make domestic demand the main driving force for economy; facing increasing uncertainties [overnight update]

- China Vice MOF official: To use more fiscal spending in consumption; to regulate tax breaks and fiscal subsidies [overnight update]

- (UK) Govt approves China plan for 'mega embassy' in London - press [overnight update]

- China PBOC sets Yuan reference rate: 7.0014 v 7.0006 prior

- China PBOC Open Market Operation (OMO): Injects CNY364B; Net injects CNY123B v drains CNY35B prior

- (CN) China MOF sells 3-month bills, 7-year bonds

- (CN) US Treasury Sec Bessent says 'progress made' on trade after meeting with China Vice Premier He - SCMP [update]

Japan

- Nikkei 225 opens -1.4% at 52,228

- Japan Tier 1 brokerage firm: BOJ may not increase JGB buying despite spike in yields financial press, citing report

- Japan Fin Min Katayama: Want markets to calm down; Reiterates FX intervention remains an option that we can take; We're not conducting expansionary fiscal policy; Confident future bond auctions will be successful - Davos [overnight update]

- Japan Fin Min Katayama: Bond market situation should improve; confident can offer stability

- Japan's Trade Min Akazawa: Japan is a buy with PM Takaichi policies; Japan will maintain its tariffs while investing $550 billion in U.S. supply chains under the U.S.-Japan Strategic Investment Initiative; [overnight update]

- Japan Chief Cabinet Sec Kihara: Reiterates stance that long-term rate moves determined by markets - financial markets [overnight update]

- (JP) Japan's JGB "turmoil" said to risk up to $130B in Treasury selling; cites analysts at large Wall St. bank - financial press

- (JP) US Treasury Sec Bessent 'in talks' with Japan over JGB selloff - US financial press [update]

Korea

- Kospi opens -1.6% at 4,808

- South Korea Jan Exports 1-20 Days Y/Y: 14.9% v 6.8% prior; Imports Y/Y: 4.2% v 0.7% prior

- South Korea PM will reportedly visit US beginning Jan 22nd - Asia press

- South Korea Fin Min Kim: Govt not considering extra budget [overnight update]

- Korea retail investors US stock holdings said to hit record highs, in spite of weak Won (Korea Times)

- Korean won (KRW) weakens further past 1,480 vs USD, threatening to head toward 1,500 level not seen since 2008 GFC [overnight update]

- South Korea Pres Lee: Won weakened less than Yen’s recent weakness; FX authorities expect Won/Dollar to be around 1,400 in 1-2 months

- South Korea’s Lee: Equity Market Undervalued Due to Geopolitical, Structural Issues

- 4 ‘major’ banks in South Korea have been fined a total of KRW272.0B in relation to alleged loan ratio collusion - Yonhap

Other Asia

- Vietnam said to begin accepting crypto market license applications - financial press

-Taiwan Dec export orders Y/Y: 43.8% V 35.5%E (fastest growth since Feb 2021) [overnight update]

-Thailand Central Bank (BOT) eases rules on foreign income repatriation to ease THB currency (Baht) weakness- press [overnight update]

-(SG) US DOD approves possible $2.3B military sale to Singapore - press

-Malaysia said to be planning to tap USD bonds (first time in 5 years) to refinance $2.24B bonds due to mature 2026 - financial press

North America

- US Pres Trump: Think it will be a successful trip; No idea how Davos trip will go - financial press, comments as he departs for Davos, Switzerland

- US White House releases Trump's order 'Stopping Wall Street from competing with homebuyers

- (US) Treasury Sec Bessent: We have the strongest economy and military in the world under President Trump; US has been trying acquire Greenland for 150 years, this is not something new; Greenland is extremely important for golden dome - CNBC

- (US) ADP Preliminary Employment Change for 4-weeks ending Jan 2nd: +8.0K v +11.25K prior

- (US) Jan Philadelphia Fed Non-Manufacturing Activity: -4.2 v -21.6 prior

- (US) Supreme Court does not issue any rulings on tariff powers today

- (CA) Canada PM Carney: We stand by Greenland and Denmark; Urge other allies to work together

- (US) Commerce Sec Lutnick: Think US GDP will grow more than 5% this quarter; If Europe retaliates with tariffs, then we'll be back at a 'Tit for tat' situation - DAVOS

- (US) Pres Trump on Air Force One turns back to DC due to 'minor electrical issue'; Trump to board another plane and continue to Davos - Axios

- OPENAI.IPO - Co starts to offer its new chatbot ads during Feb to dozens of advertisers; To charge based on ad views - TheInformation

Europe

- (PT) Portugal Dec PPI M/M: +0.4% v -0.2% prior; Y/Y: -3.2% v -3.4% prior.

- (DK) Denmark PM Frederiksen: If someone starts a trade war with Europe, we will respond; Doing all we can to avoid tariffs on Feb 1st.

- (FR) France Pres Macron: Shifting to a world without rules; US tariffs are unacceptable, especially when used as leverage; Don't intend to speak with US Pres Trump at Davos - comments at Davos.

- (DK) Greenland PM Nielsen: Military conflict unlikely, but can't be ruled out; Forming task force to guide population amid pressure - comments to media.

- (DK) Denmark Pension Fund Akademikerpension ($3B fund with $100M UST exposure) says it will exit US treasuries by end of month; Fund held $100M in Treasuries as of Dec 2025 - press.

- (FR) France PM Lecornu uses constitutional powers to force the income portion of 2026 budget through the lower house without a vote (as expected).

- (EU) ECB’s Nagel (Germany): German govt was right in launching a large fiscal package.

- (DK) US Energy Sec Wright: We are in early stages of Greenland negotiations; There is uncertainty now but we will get to a great result - Fox News interview.

- (US) Fed's Jefferson (voter): Expects inflation will resume path towards 2% goal; Sees unemployment holding steady through 2026 [weekend update].

- (FR) France PM Lecornu: Will respect deficit target at 5% of GDP in 2026.

Levels as of 00:20 ET

Nikkei 225 -0.4%; ASX 200 -0.4%; Hang Seng flat; Shanghai Composite +0.2%; Kospi +0.5%.

Equity S&P500 Futures +0.4%; Nasdaq100 +0.4%; DAX -0.1% FTSE100 +0.2%.

EUR 1.1711.117.34; JPY 157.85-158.28; AUD 0.6729-0.6744; NZD 0.5821-5839.

Gold +2.2% at $4,868/oz; BTC -2.2% at $89,604, Crude Oil -1.0% at $59.79/bbl; Copper +0.3% at $5.8480/lb.