Having been shut on Monday in observance of Martin Luther King Jr. Day, markets experienced a steep sell-off on Tuesday, with the major indices seeing their worst performance since October. This was in response to President Trump’s threat to impose additional tariffs on European countries which opposed the US takeover of Greenland. Stocks rebounded in the following session, as investors welcomed news of a framework for a future deal regarding Greenland and the tariffs being averted. Momentum continued although sentiment was somewhat dampened on Friday as Intel’s quarterly revenue forecast came in lower-than-expected, sending the chipmaker’s shares lower.
Overall, the S&P 500 lost 0.4%, the Dow Jones Industrial Average dropped 0.5% and the Nasdaq Composite declined less than 0.1%. On the S&P, energy was the top performing sector of the week, closing at a record high and extending its year-to-date gains. The small-cap Russell 2000 had outperformed the S&P 500 for 14 consecutive trading sessions, its longest streak since 1996. However, the index saw a sharp reversal on Friday, declining 1.8%, pushing it to a weekly loss of 0.3%. The dollar index saw a sharp weekly drop, while both gold and silver surged, even with the easing of geopolitical tensions. Treasury yields ended little changed, with third quarter GDP rising slightly more than a previous estimate and the personal consumption expenditures index remaining above the Federal Reserve’s target.
European markets experienced a weekly decline, as earlier concerns around trade frictions and geopolitics weighed. The pan-European STOXX 600 dropped around 1.1%, snapping a five-week winning streak. Stocks were rattled at the start of the week on the threat of an additional 10% tariff on imports, with the index seeing its biggest daily drop in two months on Monday. The subsequent relief was not enough to offset the earlier losses. Regional indices also experienced declines.
In Japan, the Nikkei 225 saw a slight loss of 0.2% whilst the broader Topix fell 0.8%. More interestingly, Japanese government bond (JGB) yields spiked on concerns around the country’s finances, with investors bracing for increased government spending. Furthermore, Prime Minister Sanae Takaichi called a snap election. The yield on the 40-year JGB crossed 4% for the first time during the week. The yen also experienced a volatile week, with growing speculation that a rate check had been carried out.
In Hong Kong the Hang Seng fell 0.4%, however on the mainland, bucking the wider losing trend, the Shanghai Composite added 0.8%. This was even with mixed economic data, where the economy met the official growth target of around 5% in 2025, while fourth quarter expansion was its slowest pace in years. It was notable that on Thursday South Korea’s Kospi index crossed the 5,000 level, boosted by semiconductors as well as corporate governance reforms. Although it ended the week slightly below the milestone, it added 3.1% and has seen a year-to-date rise of over 15% already.