Jan 20, 2026
3 min read
EBEX led the correction in European stock markets with a 1.3% fall.Uncertainty over Japanese politics is plaguing ties.
Markets are reeling from trade tensions and investors are scrambling for shelter
Capricorn led the correction in European stock markets with a decline of 1.3%.Doubts about Japanese politics punish sovereign bonds
Donald Trump's renewed threat of tariffs on European countries is not giving respite to markets amid renewed geopolitical tensions.Concerns about a renewed trade war dampened risk appetite, leading to big losses in stocks on Tuesday.Japan's debt penalty, sanctioned by Prime Minister Sanae Takaichi's election bid, sent yields on Japan's 40-year bond to record highs and spilled over into other countries.The Americans bore the brunt.As investors accelerated their search for safe havens, the US dollar's weakness against the euro accelerated.
U.S. President Donald Trump's push to take control of Greenland has brought fresh volatility to markets, once again fueling fears of a trade confrontation with traditional allies.The Republican president has heightened tensions by threatening to impose steep tariffs on champagne after French President Emmanuel Macron failed to join a U.S.-led Gaza peace initiative.
The instability that Trump has unleashed can get worse with the response that the European countries are indicating.Therefore, Michael Krautzberger, investment director of Allianz Global Investors, the largest asset manager in Germany, defended that "If I were a consultant for some European governments, I would say that it is almost necessary to create some volatility in the markets, because Donald Trump cares a lot about this, probably more than other politicians."
David Kohl, chief economist at Julius Baer, "For the European economy, this suggests a further decline in export prospects."The expert adds, “In the capital markets, the willingness to tolerate geopolitical uncertainty seems to have increased significantly.However, the escalation of the dispute is considered subversive."
Against this situation, Ibex 35 has led the reduction of European shares with a decrease of 1.3%, sometimes losing 17,400 points.After that, other indices are set, with a decrease of 1% for the German Dax and 0.6% for the French Cac, after the reduction of the Atlantic for another day.lost in the European lockdown by 1%.
Chris Iggo, Chief Investment Officer (CIO) of AXA IM Core, part of BNP Paribas management company, said: "Geopolitical and economic policy risks remain a constant concern for investors given the changing global security dynamics and political events."Such events can cause volatility in the markets, but in the short term it will be difficult to determine the real economic effects, adds the expert, "investors like security, autonomy and stability of supply chains".focus on key issues."
In the Spanish stock market, only four Ibex stocks managed to escape the fire: Fluidra rose 1.9% thanks to BNP Paribas' positive report on the valuation and Rovi rose 1.4%.Naturgia and Puig registered gains of 0.5% and 0.3% respectively.Other indexes showed sell orders.Swiss firm UBS sank 8.9% on the report to start its share price with a hedge offer to buy.
In Europe and after Monday's crisis, the luxury sector has suffered another day of losses, with Kering and Hermés losing more than 1% on the French stock market.LVMH, a producer of champagne brands such as Moët & Chandon, Hennessy, Dom Pérignon, survived the cuts, as it was able to post new tariffs on its United States.
Adding to the decline in stocks was pressure from the debt market, which is accelerating following the collapse of long-term Japanese bonds.Yields rose in response to the prime minister's election proposal to cut taxes on food, prompting Japan's finance minister to appeal to the market for calm.The yield on the 30-year Treasury note jumped 30 basis points to 3.9%, hitting a new all-time high, while the 40-year note topped 4% for the first time since its inception.Ola S. Hansen, head of commodities at Saxo Bank, notes that “Japanese yields have acted as a global liquidity anchor for decades, driving capital outflows in search of global bonds and loans.”
The Japanese debt punishment had repercussions elsewhere, particularly in the United States: the yield on US 30-year bonds rose to 4.89% and ten-year debt rose to its highest level since August.
Berenberg's research team is also bullish, noting that "it remains questionable how far Trump's current initiative, which has brought transatlantic relations to a new low, actually benefits the United States. It is clear that the policies of Trump and his administration are likely to remain volatile and difficult to plan beyond 2026." This uncertainty weighs particularly heavily on US investors and explains the renewed pressure on government bond yields inUS.10 and 30 years. Added to this is the possibility that some European investors may choose to sell US assets, a so-called sell-to-America strategy, given Trump's Greenland ambitions, which has prompted the Danish sovereign wealth fund to divest itself of US assets since February.
Meanwhile, demand for the precious metal has increased as investors seek safe havens, with gold rising 3.5% to above $4,700 an ounce for the first time.Silver is also reaching new highs amid this environment of safe-haven investors.
In the foreign exchange market, the euro was up 0.7% at $1.1733 against crude oil.Meanwhile, Brent crude, Europe's benchmark, traded steady around $64 a barrel as caution grew over US demand for Greenland, while attention remained focused on signs of a possible oversupply in 2026.
Stock market - Currency - Debt - Interest rates - Raw materials
