A look at the day ahead in European and global markets

By Stella Qiu, Australia Economics Correspondent

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Wall Street's verdict on Trump's Greenland move is in and it's not pretty. All three U.S. equity benchmarks suffered their worst one-day falls in three months, the dollar ‌slumped by the most in a month while Treasuries were shellacked, with the 30-year Treasury yield racing towards the 5% danger zone.

That brought back memories of the "Sell America" trade, though the question on everyone's mind is whether Trump will "TACO" again like he did with his tariffs last ‌April.

A person makes preparations at the Davos Congress Centre, ahead of the World Economic Forum (WEF), in the ski resort of Davos, Switzerland, January 18, 2026. REUTERS/Denis Balibouse

Listening to him, the answer is there's no going back on Greenland. Yet markets are clinging to hopes that this is all just "Art of the Deal" bluster and he might choose to de-escalate during his big speech in Davos later today.

That was ‍enough for Wall Street futures to edge up 0.3% in Asia, while Treasuries steadied. The selloff in regional stocks also slowed, helped by gains in Chinese shares, while Japan's Nikkei narrowed its losses to ⁠0.5%.

European bourses are set for a muted open, with EURO STOXX 50 futures down ‍0.1%.

The rout in global bond markets also paused, providing some relief to investors that have been caught ‌up ‌in a perfect storm of worries over exposure to U.S. assets and a surge in Japanese government borrowing costs.

The 40-year yield has since fallen 6 basis points, after a 26 bps jump on Tuesday. Fears of a massive spending spree under Japanese Prime Minister ⁠Sanae Takaichi still remained, ⁠drawing critique from the opposition.

Safe-haven gold remains in demand, up 1.5% to break $4,800 an ounce, while platinum crossed $2,500 for the first time.

Finally, the U.S. Supreme Court is hearing arguments in the Federal Reserve Governor Lisa Cook case later ‍today, just in case anyone forgot what Trump was trying to do to the central bank.

Graphics are produced by Reuters.