Asia-Pacific markets mostly slip as investors assess Greenland developments and key China data

Asia markets mostly fell on Monday.

China released its fourth-quarter GDP numbers, along with December statistics for retail sales, urban investment and industrial output.

Asia-Pacific markets mostly slid Monday, as investors assessed threats from the Trump administration towards Greenland over the weekend, as well as key economic data from China out Monday.

Over the weekend, U.S. President Donald Trump and European leaders exchanged tense rhetoric over the Arctic region, with Trump threatening tariffs on eight European countries and demanding control of Greenland, which is part of Denmark.

European leaders reacted by calling the threats “completely wrong” and “unacceptable.”

Over in Asia, China released its fourth-quarter GDP numbers, along with December statistics for retail sales, urban investment and industrial output.

Hong Kong Hang Seng index tumbled 0.73%, and the mainland Chinese CSI 300 rose 0.4%.

Japan’s Nikkei 225

lost 0.97%, leading losses in Asia, while the Topix was down 0.49%. Yields on benchmark 10-year Japanese Government Bonds climb to a high of 2.218%, its highest level since 1999.

South Korea’s markets bucked the wider trend, with the Kospi
up 0.93%, while the small cap Kosdaq gained 0.67%.

Automakers Hyundai touched a record high as its shares surged as much as 12.59% Monday.

Australia’s S&P/ASX 200 fell 0.43%, pulled by tech stocks.

On the commodities front, both prices of spot silver and gold hit record highs. Gold was last up over 4.17% to $93.7 per ounce, and gold last traded 1.8% higher at $4,676.94 per ounce.

On Friday in the U.S., the S&P 500 finished just below the flatline and posted a losing week, while the Nasdaq Composite also inched down 0.06%. The Dow Jones Industrial Average fell 0.17%.

The three major indices hit their session lows after Trump said in the White House on Friday that he’d rather have National Economic Council Director Kevin Hassett stay in his current role and that he might not be chosen to become the next U.S. Fed chair.

Hassett has been viewed as the more market-friendly option to replace the current Fed chair than the new frontrunner nominee, former Fed Governor Kevin Warsh, and is expected to be more willing to keep rates low.

Next few weeks will show if Trump has ultimately pushed too far with Greenland levies, as calls grow for the bloc to take tougher action

As the sun set over the port of Limassol in Cyprus, the head of the European Commission, Ursula von der Leyen, last Thursday used a tried and tested formula to describe the US – calling it one of “our allies, our partners”. Only 24 hours earlier, Denmark, an EU and Nato member state, had warned that Donald Trump was intent on “conquering” Greenland, but the reflex at the top of the EU executive to describe the US as a friend runs deep.

Trump’s weekend announcement that eight countries that have backed Greenland would face tariffs unless there was a deal to sell the territory to the US was another hammer to the transatlantic alliance, mocking the notion that the US is Europe’s ally. The eight countries include six EU member states, as well as Norway and the UK, the latter unprotected by the much vaunted “special relationship”. It suggests that Europe’s strategy of flattering and appeasing the US president has failed.

For critics, exhibit A is von der Leyen’s decision to sign a trade deal with Trump that was deeply biased in favor of the US. While the EU agreed to eliminate tariffs on many US products, it accepted 15% duties on many products and 50% on steel. After years of the EU exalting its heft as a trade player, the terms of the EU-US trade deal signed at Trump’s Turnberry golf course last July were seen as a humiliation.

Von der Leyen defended that deal by saying it provided “crucial stability in our relations with the US” at a time of acute instability in an “unforgiving” world.

Now that argument is left in ruins, while the 0% tariffs for the US may never be implemented. The Trump administration has succeeded in unifying the European parliament from radical left to far right – via mainstream groups – against the agreement. The leader of France’s far-right National Rally party, Jordan Bardella, described Trump’s threats as “commercial blackmail” and said the EU should suspend last summer’s agreement. Meanwhile, the centre-right European People’s Party leader, Manfred Weber, aligned itself with other mainstream parties in calling for ratification of the deal to be paused.

The unspoken reason for accepting the unequal trade bargain was the hope it would keep the US backing Ukraine to defend itself in its war with Russia, providing capabilities, such as intelligence, which Europe is incapable of Asia matching after decades of low defense spending. The former prime minister of Latvia Krišjānis Kariņš has described this as Europe’s diplomatic disadvantage. “Europe still needs the US,” he told the Guardian this week, before the latest Trump announcement. “So that’s what makes the entire process [on Greenland] very, very difficult. And national leaders are generally speaking quite hesitant to criticize President Trump. But they’re also hesitant in explaining to their societies why that’s the case, this security dependence.”

Asia-Pacific markets

But Trump may have pushed the EU too far. Although Greenland left the EU’s predecessor organisation, the European Community, in 1985, acquiescing in the forced sale of the territory of an EU member state would send a disastrous signal about the EU as a geopolitical actor and its commitment to Ukraine.

As European leaders lined up to declare their determination to maintain Danish and Greenlandic sovereignty, there are growing calls to use the EU’s powerful but untested anti-coercion instrument against the US.

The regulation, invariably described as the EU’s “big bazooka”, Asia was originally conceived as a response to Chinese economic pressure. It would permit the EU to impose sweeping restrictions on US goods and services, suspend investment or intellectual property protections.

France, which has long championed a muscular response to US pressure, Asia called on the EU to trigger the instrument if Trump goes ahead with tariffs on countries backing Greenland. But using the anti-coercion instrument is neither quick nor simple. While the commission promises “a certain expeditedness”, agreeing on sanctions could take around one year. Punitive measures require agreement of at least 55% of EU member states representing 65% of the population.

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