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Asia-Pacific markets were mostly lower on Tuesday as investors assessed the threat of new U.S. tariffs related to Greenland, raising concerns about escalating trade tensions with Europe.
Relations over Greenland are further strained as European countries reportedly discuss counter-tariffs and broader punitive economic measures in response to President Donald Trump’s threat of new tariffs.
President Trump announced on Saturday that exports from eight European countries would start at 10% on February 1 and increase to 25% by June 1 if negotiations fail to secure U.S. control over Greenland, a mineral-rich, semi-autonomous island under Danish control.
hong kong Hang Seng Index Mainland China’s CSI 300 index fell 0.26% on increased regulatory scrutiny as trading activity surged.
Authorities have moved to rein in leverage after onshore market volumes reached record levels, in part due to margin trading volumes rising to record highs.
Standard Chartered’s Raymond Chen said despite the tightening, the bank remains positive on China A-shares, citing economic stabilization and expectations for fiscal support at China’s policy meeting scheduled for March 2026.
“We see the strength in Chinese stocks as sustainable given the policy stimulus that provides further upside to our mid-teens earnings growth forecast over the next 12 months,” said the bank’s chief investment officer for Greater China.
Investors are closely monitoring developments in the Japanese market after Prime Minister Sanae Takaichi announced plans on Monday to dissolve parliament and hold a snap general election on February 8.
Japanese Nikkei Stock Average fell 0.96%, and TOPIX fell 0.69%. South Korea’s Kospi rose 0.52%, setting a new record high for the second day in a row, while the small-cap Kosdaq rose 1.78%.
Japan’s 40-year government bond yield rose to 4% for the first time.
Japan’s ruling coalition has maintained a one-seat majority in the House of Representatives since its formation in October, when Takaichi became prime minister following the resignation of his predecessor. Fitch Group said in a note that a snap election would increase near-term political uncertainty, but a government with stronger powers could provide greater policy clarity.
Fitch expects government debt to remain high over the medium term but decline gradually as strong nominal GDP growth offsets widening fiscal deficits and higher borrowing costs.
Consolidated general government debt is projected to ease to the mid-190% of GDP by FY2029, from an estimated 199.5% in FY2025 and a peak of 222% in FY2020.
Australia’s S&P/ASX 200 fell 0.46%.
U.S. stock futures pointed to weak trading on Wall Street as President Trump intensified his rhetoric on Greenland.
Correction: This article has been updated to correct that Asia-Pacific markets were mostly down on Tuesday. A previous version of this article misstated that date.
