Asian equities extended their losing streak as concerns mounted over US threats to acquire Greenland, ahead of a closely watched speech by Donald Trump at the World Economic Forum in Davos.
Markets remained gripped by the so-called “Sell America” trade that re-emerged after last year’s “liberation day” tariff announcements in April. Wall Street fell more than 2pc overnight, while the US dollar recorded its steepest drop in over a month.
Investors sought refuge in safe-haven assets, sending gold up 2.1pc to a fresh record high of $4,865 an ounce.
Attention now turns to Davos, where President Trump is due to deliver a keenly awaited address later in the global trading day, with investors watching closely for signals that could either ease or escalate tensions with Europe.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.5pc. Japan’s Nikkei 225 slid 0.5pc, extending its decline to a fifth consecutive session.
Chinese equities outperformed the region, with the blue-chip index rising 0.5pc.
Bond markets, however, remained under strain after a sharp global sell-off, driven by concerns over exposure to US assets and a surge in Japanese borrowing costs. Fears of increased government spending under Prime Minister Sanae Takaichi had earlier pushed Japanese government bond yields to record highs, drawing criticism from opposition parties.
On Wednesday, Japanese bonds stabilised as buyers returned at depressed price levels. Yields on the 40-year Japanese government bond fell 11 basis points to 4.1pc, after surging 26 basis points the previous day.
US Treasury yields also edged lower, with the benchmark 10-year yield slipping two basis points to 4.28pc, after touching a five-month high of 4.31pc overnight.
