^{Photo: Bloomberg.com}

Markets open the week on the defensive

Asia-Pacific equities mostly moved lower at the start of the week as investors balanced rising geopolitical risks with a fresh batch of economic data from China. Uncertainty surrounding U.S. President Donald Trump’s renewed rhetoric over Greenland, combined with mixed signals from the world’s second-largest economy, set a cautious tone across regional markets.

Over the weekend, tensions escalated after Trump threatened tariffs on multiple European countries while reiterating demands linked to Greenland, a semi-autonomous territory of Denmark. European leaders responded forcefully, calling the comments unacceptable and dismissing any suggestion of U.S. control. While the dispute centers on Europe, investors in Asia were quick to price in the broader implications for global trade and market stability.

China data offers limited reassurance

China released several closely watched indicators, including fourth-quarter gross domestic product figures and December data covering retail sales, industrial output, and fixed-asset investment. While overall growth remained within expectations, the data reinforced concerns about uneven momentum in domestic demand.

Retail sales growth remained subdued, highlighting continued pressure on consumer spending, while industrial output showed relative resilience, supported by manufacturing and exports. Urban investment figures pointed to ongoing weakness in property-related spending, underscoring structural challenges that continue to weigh on China’s recovery.

Mainland Chinese stocks were little changed following the data. The CSI 300 edged slightly lower, while Hong Kong’s Hang Seng Index dropped 1.05%, reflecting cautious sentiment among global investors toward Chinese assets.

Japan leads regional losses as bond yields surge

Japanese equities underperformed their regional peers. The Nikkei 225 fell 0.97%, marking the steepest decline among major Asian indexes, while the broader Topix slipped 0.47%.

Investor attention in Japan was firmly fixed on the bond market, where yields surged to levels not seen in decades. The benchmark 10-year Japanese Government Bond yield climbed to 2.244%, its highest point since 1999. Yields on 20-year and 30-year JGBs also reached record highs, fueling concerns about tighter financial conditions and the potential impact on equity valuations.

Rising yields have intensified speculation around the Bank of Japan’s policy path, with markets increasingly pricing in the possibility of further normalization after years of ultra-loose monetary policy.

South Korea stands out, Hyundai hits record

South Korean markets bucked the broader regional trend. The Kospi gained 0.81%, while the tech-heavy Kosdaq rose 0.68%, supported by strength in industrial and automotive stocks.

Hyundai Motor was a standout performer, with shares surging as much as 12.59% to touch a record high. Investors reacted positively to optimism around margins, global demand, and the company’s longer-term strategy across electric vehicles and next-generation mobility.

Australia slips, commodities surge

Australian equities also moved lower, with the S&P/ASX 200 declining 0.48%. Technology stocks were among the biggest drags, tracking weakness in global tech sentiment and rising bond yields.

In contrast, commodities continued to rally. Precious metals hit fresh record highs as investors sought hedges against geopolitical risk and inflation uncertainty. Spot silver surged more than 3.6% to around $93 per ounce, while gold climbed about 1.6% to roughly $4,668 per ounce, extending an already strong year-to-date performance.

U.S. backdrop adds to uncertainty

Wall Street ended last week on a subdued note, providing little directional support for Asian markets. The S&P 500 closed just below flat and posted a weekly loss, while the Nasdaq Composite slipped 0.06%. The Dow Jones Industrial Average fell 0.17%.

U.S. equities dipped further after Trump said he preferred National Economic Council Director Kevin Hassett to remain in his current role rather than move to the Federal Reserve, adding uncertainty around the future leadership of the central bank. Markets have viewed Hassett as a more accommodative and market-friendly option compared with other potential candidates, and the comments triggered renewed concerns about the direction of U.S. monetary policy.

Cautious tone likely to persist

With geopolitical tensions resurfacing, bond yields climbing in key markets, and China’s recovery showing mixed signals, investors across Asia are entering the week with a defensive mindset. Market participants are likely to remain highly sensitive to policy headlines and economic data, as even small shifts in sentiment could drive outsized moves across equities, currencies, and commodities.

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