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Asia-Pacific markets were mostly lower on Monday as investors assessed renewed U.S. tariff threats tied to Greenland, raising concerns about escalating trade tensions with Europe.
European states are reportedly discussing counter-tariffs and broader punitive economic measures in response to fresh tariff threats from President Donald Trump, further straining relations over Greenland.
Trump on Saturday announced that exports from eight European nations would start at 10% on Feb. 1 and climb to 25% by June 1 if talks fail to secure U.S. control of Greenland, a mineral-rich, semi-autonomous island under Danish control.
Hong Kong’s Hang Seng Index rose 0.1%, while mainland China’s CSI 300 slid 0.26% after heightened regulatory scrutiny following a surge in trading activity.
Authorities have moved to rein in leverage after onshore market turnover hit record levels, driven in part by a rise in margin trading balances to an all-time high.
Despite the tightening, Standard Chartered’s Raymond Cheng said the bank remains positive on China A shares, citing a stabilizing economy and expected fiscal policy support at China’s upcoming policy meetings in March 2026.
“We view the strength of China equities as sustainable, given policy stimulus to add further upside to our projected mid-teen earnings growth for the forward 12 months,” the bank’s regional chief investment officer for Greater China said.
Investors are closely watching developments in Japanese markets after Prime Minister Sanae Takaichi said on Monday that she plans to dissolve parliament and call a snap election on Feb. 8.
Japan’s Nikkei 225 slid 0.96%, while the Topix declined 0.69%. South Korea’s Kospi rose 0.52% to a record high for a second straight day, while the small-cap Kosdaq jumped 1.78%.
Yields on Japan’s 40-year government bond rose to 4% for the first time.
Japan’s ruling coalition holds a one-seat Lower House majority following its formation in October, when Takaichi became prime minister after her predecessor resigned. While the snap election would raise near-term political uncertainty, it could bring greater policy clarity if a government emerges with a stronger mandate, Fitch Group said in a note.
Fitch expects government debt to remain elevated over the medium term, but to gradually decline as stronger nominal GDP growth offsets wider fiscal deficits and higher borrowing costs.
Consolidated general government debt is projected to ease to the mid-190% range of GDP by fiscal 2029, from an estimated 199.5% in fiscal 2025 and a peak of 222% in fiscal 2020.
Australia’s S&P/ASX 200 lost 0.46%.
U.S. stock futures pointed to a downbeat session on Wall Street as Trump intensifies his rhetoric on Greenland.