EU not backing down on Trump 10% extra tariffs on eight European nations over Greenland
|Asia market update: Markets fret as EU not backing down on Trump 10% extra tariffs on 8 European nations over Greenland.
General trend and developments
- Tariffs back at the top of the headlines again, as Pres Trump threatens to impose additional 10% tariffs on Denmark, Norway, Sweden, France, Germany, the UK, The Netherlands and Finland, for “having journeyed to Greenland, for purposes unknown”. Tariffs to increase to 25% from June 1st, 2026, “until such time as a Deal is reached for the Complete and Total purchase of Greenland.” Trump gave as his primary reason the building of the ‘The Dome’ (US protective missile shield).
- On Sunday the 8 European countries in question released a formal statement in response, reiterating that they stand in full solidarity with the Kingdom of Denmark and the people of Greenland, adding that Trump’s tariffs undermine transatlantic relations and risks a dangerous downward spiral. (Recall that the US-EU trade agreement of 15% tariffs has yet to be formally ratified by the EU. Also, notably Northern Ireland chose not to sign onto the statement along with Britain, calling it ‘a bit premature today’). France Pres Macron has requested that the EU’s yet-to-be-used “anti-coercion” instrument be activated, while German Fin Min Klingbeil said that “a line has been crossed“.
-US equity FUTs -0.8% to -1.1% at the open, with DAX FUTs in Germany even worse off -1.3% . Nikkei -0.5% but Kospi managed a smal rise to a fresh record high.
- Bitcoin -2.9%, ETH -3.6% following Greenland developments.
- EU and LATAM Mercosur officials finally sign their official FTA after 25 years of negotiations, but EU Parliament ratification likely to be contentious and close.
- Steepening of Japan yield curve, 20.30 +10bps Japan 10-year JGB yields +3.5bps to 2.215%, highest since Feb 1999; Yield curve steepens at long-end (20,30,40 years) +6bps.
- Protests in Iran continued, despite a brutal crackdown by the Iranian authorities who have reportedly also brought around 5,000 Islamist mercenaries from Iraq, Afghanistan and Pakistan to force protestors back into their houses. (See if WTI Crude stays at its slightly softer levels below $60 on Friday’s close.
- OIS Friday Overnight chances of BOJ rate hike by April rose to 62% v 54% day before, and by June rose to 86.5% v 82% day before.
-This evening in Japan waiting for PM Takaichi to confirm details of the Lower House snap election, expected to be Feb 8th else Feb 15th. Takaichi herself reportedly considering suspending the sales tax on food ahead of the election [which has caught her opponents on the back foot in terms of preparation, as indicated by the rushed merger of major center-left party CDP with the LDP’s former coalition partners, Komeito].
- Nvidia’s H200 chip’s on-again off-again potential shipments to China again shut down as reports the H200 chip suppliers have paused production after China customs bureau blocked shipments of the AI chips from entering China.
- Extra bite to this year’s World Economic Forum (WEF) in Davos (Jan 19-23rd), with a large US delegation led by Pres Trump, Treas Sec Bessent, Commerce Sec Lutnick. Sec of State Rubio., USTR Greer, Energy Sec Wright, AI/Crypto Czar Sacks, Special Envoy Witkoff and others. Trump scheduled to address the Forum on Wed, Jan 21st, an anticipated "America First" economic, trade and energy-themed speech.
- US White House considering Exec Order to implement Pres Trump’s proposed credit card 10% rate cap, but may sweeten by asking regulators to ease some liquidity standards to help get card issuers on board.
- A further hit to the reliability of Wall St Journal reporting in recent times, with Trump disputing WSJ reports that he had ever offered the job of Fed Chair to JP Morgan CEO Jamie Dimon, later corroborated by Dimon himself. Trump also took the opportunity to say he planned to sue JP Morgan for debanking him after the Jan 6th, 2021 incident.
- Major US corporate earnings this week include DHI, MMM, NFLX, UAL, HAL, JNJ, TRV, ABT, GE, PG, COF, CSX, INTC, SLB.
- Also Japan BOJ rate decision this Friday, Jan 23rd, plus potential SCOTUS decision on IEEPA tariffs and US Fed board member Lisa Cook on Wed Jan 21st.
Holidays in Asia this week
- Mon Jan 19th US market holiday.
Headlines/economic data
Australia/New Zealand
- ASX 200 opens -0.2% at 8890.
- Australia Dec Melbourne Institute Inflation M/M: 1.0% v 0.3% prior; Y/Y: 3.5% v 3.2% prior.
- New Zealand PM Luxon State-of-the-Nation address: Economy is recovering, 2026 will be a brighter year - financial press.
China/Hong Kong
- Hang Seng opens -0.8% at 26,641; Shanghai Composite opens -0.3% at 4,090.
- China Q4 GDP Q/Q: 1.2% V 1.1%E; Y/Y: 4.5% V 4.5%E.
- China DEC Retail sales Y/Y: 0.9% V 1.0%E (slowest growth since Dec 2022).
- China DEC industrial production Y/Y: 5.2% V 5.0%E.
- China DEC YTD fixed urban assets Y/Y: -3.8% V -3.1%E.
- China Dec YTD Property Investment Y/Y: -17.2% v -16.5%e.
- China Dec Surveyed Jobless Rate: 5.1% v 5.2%e.
- NBS [China stats agency]: Notes contradiction between supply and demand remains prominent.
- China Dec New Home Prices M/M: -0.4% v -0.4% prior.
- China said to lower down-payment requirements for commercial property mortagages; Upgrades support measures to boost SME potential - financial press (update).
- China and Canada renew bilateral currency agreement for another 5 years - follows PM Carney and Premier Li meeting and trade deal signature
- (US) USTR Greer: Canada decision to set China EV quota at 49K units is problematic - CNBC [weekend update].
- (CA) Canada PM Carney: Reached prelim trade agreement with China; Canada to allow up to 49K Chinese EVs into domestic market with tariff rate of 6.1%; To safeguard stability of global supply chain - comments from Beijing [weekend update].
- China Securities Regulatory Commission: To conduct counter-cyclical adjustment in a timely manner [weekend update].
- NVDA Reportedly suppliers for Nvidia's H200 chip have paused production after China customs bureau blocked shipments of the AI chips from entering China - FT [weekend update].
- China PBOC sets Yuan reference rate: 7.0051 v 7.0078 prior (strongest level since May 18th, 2023).
- China PBOC Open Market Operation (OMO): Injects CNY158B; Net injects CNY72B v injects CNY53B prior.
Japan
- Nikkei 225 opens -1.0% at 53,385.
- Japan Nov Core Machine Orders M/M: -11.0% v -5.1%e; Y/Y: -6.4% v +4.9%e.
- Japan Nov Tertiary Industry Index M/M: -0.2% v 0.0%e.
- Japan Nov Final Industrial Production M/M: -2.7% v -2.6% prelim; Y/Y: -2.2% v -2.1% prelim.
- Japan PM Takaichi said to urge China Not to use economy as pressure - Japanese press.
- Japan sells ¥3.3T vs. ¥3.3T indicated in 12-Month Bills; Avg Yield: 0.9693% v 0.8627% prior; bid-to-cover: 3.60x v 3.01x prior.
- BOJ Quarterly Opinion Survey: 83.0% of Japanese households expect inflation to rise five years from now vs 84.8 prior.
- (IT) Italy PM Meloni: Confirms alignment with Japan PM Takaichi; Consolidates new Italy-Japan axis - comments on State visit to Japan (update).
- Japan Fin Min Katayama: My dialogue with BOJ Gov Ueda has been very good [weekend update].
- BOJ decides to execute guidelines for disposal of ETF and J-Reit; to implement the new ETF disposal policy on Jan 19th [Mon] - press [weekend update].
- Reportedly Japan PM Takaichi considers suspension of sales tax on food, ahead of snap election – press [weekend update].
Korea
- Kospi opens -0.2% at 4,829.
- South Korea FSC (financial regulator) to improve finances of credit union MG Community Credit Cooperatives - press (update).
- Korea Pres Lee: Signed MOU for chips, aerospace and AI supply chains with Italy PM Meloni - Blue House statement.
Other Asia
- Taiwan sells NT$35B vs. NT$35B indicated in 2-year Certificates of Deposit (NCDs): Avg Yield: 1.234% v 1.206% prior, bid-to-cover x v 3.72x prior.
North America
- (US) Pres Trump: Building a New York Stock Exchange in Dallas is an "unbelievably" bad thing for New York - financial press.
- US Pres Trump: Now it is time; and it will be done (referrring to Greenland deal) - Truth Social post.
-(EU) Trump imposes 10% tariff on 8 European nations, effective Feb 1st, that will continue until a deal is reached to sell Greenland to the US; Tariff will rise to 25% on June 1st - Truth Social (weekend update).
- Anthropic: Microsoft and Nvdia said to have committed up to $15B into Co; Sequoia also targets major investment; Co aiming to raise $25B at EV $350B - FT (update).
- (US) White House considers using Executive Order to enact Trump's plan to cap credit card rates; May loosen certain liquidity standards to get banks on board - press [weekend update].
- (US) Officials say Pentagon is preparing 1,500 soldiers for possible deployment to Minnesota - Washington Post [weekend update].
- TSLA CEO Musk: Our AI5 chip design is almost done and AI6 is in early stages; Aiming for a 9 month design cycle.
-Trump says he plans to sue JP Morgan for "DEBANKING me"; Says WSJ report on Wed that Trump had offered CEO Dimon the Fed Chairman post in early 2025 is untrue - Truth Social; FOLLOW UP: JP Morgan CEO Dimon confirms Trumps assertion, says he was never asked to be Fed Chair [weekend update].
-(US) Treasury Sec Bessent: Down to 4 candidates for the Fed Chair position; Expects Fed Chair decision before Davos or upon return; Fed needs some 'pruning' - Fox business interview [weekend update].
-(US) Fed's Jefferson (voter): Expects inflation will resume path towards 2% goal; Sees unemployment holding steady through 2026 [weekend update].
-CA) Canada PM Carney: Have agreed to Trump's Board of Peace for Gaza in principle; Details being worked out - financial press [weekend update].
-WorldACD Weekly Air Cargo Trends (week 2): Demand rebounds after normal end-of-year slump (weekend update.).
Europe
- (UK) Jan Rightmove House Prices M/M: +2.8% v -1.8% prior; Y/Y: 0.5% v -0.6% prior.
- (IR) Iran Pres Pezeshkian: Any attack on the Supreme Leader (Khamenei) will cause all-out war - post on X.
- (IE) Ireland PM Martin: Bit premature 'today' to consider EU's anti-coercion instrument in response to latest US tariff threats - financial press.
- (EU) Joint Statement by Denmark, Finland, France, Germany, Netherlands, Norway, Sweden and Britain: We stand in full solidarity with the Kingdom of Denmark and the people of Greenland - financial press.
- (EU) European leaders react to Trump's Greenland-related tariffs, rejecting his premise [weekend update].
- (DE) Head of German Economic Institute DIW: Escalation of trade conflict hits the German economy hard, creating uncertainty and further weakening exports [weekend update].
- EU and LATAM Mercosur officials (finally) sign official Free Trade Agreement; Follows 25 years of negotiations; Still faces ratification hurdles - financial press (update).
Levels as of 01:20 ET
Nikkei 225 -0.7%; ASX 200 -0.3%; Hang Seng -1.0%; Shanghai Composite +0.4%; Kospi +1.7%.
Equity S&P500 Futures -0.9%; Nasdaq100 -1.2%; DAX -1.1% FTSE100 -0.4%.
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