United States
Wall Street endured its most punishing session since April’s tariff-induced meltdown as President Donald Trump’s escalating standoff with European leaders over Greenland sent shockwaves through global markets.
The S&P 500 tumbled 2.1 per cent to 6,801, wiping out its gains for 2026, while the tech-heavy Nasdaq 100 shed 2.1 per cent and the Dow Jones Industrial Average dropped 1.8 per cent to 48,463. A gauge tracking the market’s megacap technology giants fell 3.1 per cent, with Nvidia and Tesla each losing more than 4 per cent.
The selling intensified through the afternoon after an overnight surge in Japanese bond yields sparked a broader rout in global debt markets, pushing US Treasury yields sharply higher. The 10-year Treasury yield climbed seven basis points to 4.29 per cent, hitting a four-month high as investors also digested reports that a Danish pension fund plans to exit its US government bond holdings.
Trump’s threat to impose tariffs on eight European nations opposing his Greenland ambitions proved the catalyst for the risk-off mood. The US President also floated a crushing 200 per cent levy on French wines and champagne, rattling luxury goods and consumer discretionary names across both continents. Markets are now anxiously awaiting developments from the World Economic Forum in Davos, where Trump is expected to arrive on Wednesday.
The VIX volatility index spiked to its highest level since November, reflecting heightened anxiety among traders. Small-cap stocks also declined but managed to outperform their larger peers for a twelfth consecutive session, suggesting some rotation beneath the surface continues despite the headline turbulence.
After the bell, Netflix delivered solid quarterly results but issued a cautious outlook, while United Airlines beat earnings expectations. The streaming giant also announced an amended all-cash agreement to acquire Warner Bros. Discovery’s studio and streaming business as it battles Paramount Skydance for one of Hollywood’s most storied entertainment companies.
Europe
European equities joined the global selloff, with the Stoxx 600 falling 0.7 per cent as trade war fears returned to the forefront of investor concerns.
Luxury goods giant LVMH extended its losing streak to seven consecutive sessions after Trump threatened the punitive tariffs on French wine and champagne. The broader consumer products sector closed at a three-month low, with Hermès and Richemont also dragged lower.
Energy stocks proved a rare bright spot, gaining ground as oil prices climbed on geopolitical tensions. TotalEnergies rose 1.4 per cent after reporting higher-than-expected upstream volumes, while Equinor advanced 1.5 per cent following a gas and condensate discovery in the North Sea.
The technology sector held its ground, with ASML gaining 1.7 per cent after Citi raised price targets across European semiconductor equipment names. ASM International and BE Semiconductor also posted solid gains. Media stocks rebounded from their lowest level since late 2023, led by Informa’s 4.6 per cent jump after confirming double-digit growth for 2025. Fintech darling Wise soared 16 per cent following upbeat earnings guidance.
Banks struggled, with Santander and Intesa Sanpaolo among the notable decliners. Real estate was the session’s worst performer, shedding 1.9 per cent as rising bond yields weighed on the interest-rate sensitive sector.
Australia
Australian shares are set for a soft start to Wednesday’s session, with S&P/ASX 200 futures pointing to a decline of 0.6 per cent at the open to around 8,732.
Rio Tinto will be in focus after releasing a quarterly production update showing record Pilbara iron ore output and shipments for the December quarter. Production rose 4 per cent year-on-year while shipments jumped 7 per cent as the miner recovered from earlier weather disruptions and celebrated the first shipment from its Simandou project. Annual copper output also hit record levels, climbing 11 per cent on the back of the underground ramp-up at Oyu Tolgoi.
Lynas Rare Earths reported a 30 per cent quarter-on-quarter decline in neodymium-praseodymium output to 1,404 tonnes after power disruptions in Kalgoorlie and planned maintenance in Kuantan. However, average selling prices improved significantly to $85.60 a kilogram from $54.30 in the prior quarter, supported by firmer benchmark pricing. Quarterly gross sales revenue came in at $201.9 million.
Telix Pharmaceuticals posted stronger December quarter revenue of approximately $208 million, up 46 per cent on the prior year. Macquarie Group is reportedly in discussions to acquire telecom tower firm Edotco. Beach Energy, Evolution Mining and Paladin Energy are also due to release sales results.
Broker activity saw Jefferies upgrade Dyno Nobel to buy and lift HUB24 to hold, while Citi raised REA Group to buy. South32 was cut to hold by SBG Securities.
Bond yields edged higher, with the three-year rising 4 basis points to 4.18 per cent and the ten-year adding 4 basis points to 4.78 per cent.
Commodities and currencies
Gold surged past $US4,700 an ounce to fresh record highs as investors sought safety amid the escalating transatlantic tensions. The precious metal gained 1.9 per cent to around $US4,758 an ounce, extending a remarkable rally that has lifted prices nearly 75 per cent over the past twelve months.
Oil prices firmed, with Brent crude rising 0.8 per cent to $US64.45 a barrel and West Texas Intermediate gaining 1.5 per cent to $US60.34. Iron ore slipped 0.4 per cent to $US104.20 a tonne.
Copper retreated as the risk-off mood and concerns about a broader trade war weighed on base metals. Prices on the London Metal Exchange fell back to around $US13,000 after topping $US13,300 last week.
The Australian dollar firmed 0.3 per cent to 67.33 US cents, benefiting from broad US dollar weakness. The greenback fell against most major currencies, with the euro climbing 0.6 per cent to $US1.1714.
Bitcoin tumbled below $US90,000 for the first time since early January, shedding 3.6 per cent to around $US89,550 as risk assets came under pressure across the board. Ether fared even worse, plunging 6.6 per cent.
Economic Calendar
US:
- MBA Mortgage Applications Jan 23:00
- Construction Spending MoM Oct 02:00
This article was written by Calvin Curdie, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
