Global financial markets are dicey early Wednesday, after facing losses on Tuesday as rising US political and foreign-policy risk triggered risk aversion. US equities, the dollar, and US Treasuries all suffered downside, amid a higher risk premium linked to Washington’s policy uncertainty.
The US Supreme Court issued two rulings, but neither addressed tariffs, extending uncertainty with a decision now expected no earlier than February 20.
U.S. President Donald Trump said he does not know how the Supreme Court will rule on tariffs, calling tariffs “like a license” and saying the administration may need to repay money if it loses. He repeated familiar claims about President Joe Biden, the stock market, a stolen election, and potential 20% GDP growth, alongside sharp comments on Somalia, with no immediate market impact.
Trump said he wants to engage with Venezuelan opposition leader Maria Corina Machado, though allies of the ousted president, Nicolas Maduro, still lead the government. He said the United Nations should continue, argued the UK’s main problems are immigration and energy, and claimed Norway controls the Nobel Peace Prize.
On Greenland, Trump said, “You’ll see,” citing meetings scheduled in Davos. He confirmed he will not attend the G7 in Paris, said the Panama Canal remains “sort of” on the table, and described the situation with Iran as uncertain. He also said the North Atlantic Treaty Organization (NATO) has been good and suggested an outcome that would satisfy both NATO and the US, which slightly eased risk sentiment.
Meanwhile, the US plans to reduce staffing at several key NATO command and intelligence bodies, according to officials familiar with the matter. The cuts are expected to heighten European concerns about Washington’s long-term commitment and reinforce uncertainty around defence policy, trade, and alliance cohesion.
Trump is due to speak at the World Economic Forum in Davos and has agreed to meet European leaders, providing a potential easing in the risk aversion.
Elsewhere, China is preparing a new five-year plan for 2026–2030 to boost domestic consumption, addressing a “prominent” imbalance between strong supply and weak demand, with a growing focus on services. Officials from the National Development and Reform Commission (NDRC) said policies will aim to better align supply and demand, with vice head Wang Changlin noting that the supply-heavy, demand-light structure remains a major challenge.
That said, Wells Fargo expects the Federal Reserve to hold rates steady at its January 27–28 meeting but forecasts two 25-basis-point cuts at the March and June meetings of the Federal Open Market Committee (FOMC).
In Japan, market stress is rising as 30-year Japanese government bond (JGB) yields jumped 25 basis points in one day. Prime Minister Sanae Takaichi launched an election campaign that includes more spending in a heavily indebted country. Japan’s opposition Democratic Party for the People (DPP) urged the government and the Bank of Japan (BOJ) to act, including potential bond buybacks, slower BOJ tapering, and foreign-exchange intervention. Japan’s 40-year JGB yield rose above 4% for the first time, reaching around 4.2%, after Takaichi called a February 8 snap election and proposed a two-year suspension of the 8% food sales tax.
New Zealand Prime Minister Christopher Luxon set the next general election for Saturday, November 7, 2026, an early political commitment rather than the formal legal start of the election timetable.
At Davos, Canada’s Prime Minister Mark Carney warned that the global order has broken down and will not return, calling on middle powers to cooperate in a world likely to grow poorer.
Additionally, the energy market analysts note that in an environment of oversupply, disruptions linked to Venezuela are unlikely to materially move global oil prices. Still, the WTI crude oil ended Tuesday on a positive note.
Amid these moves, the U.S. Dollar Index (DXY) hovers at a two-week low, pausing a two-day slide, as major currency buyers take a breather after a volatile session. Asia-Pacific equities trade mixed following Wall Street’s largest daily drop since October. Cryptocurrencies are also recovering from recent losses, while gold and silver hit fresh record highs as investors rush toward safe-haven assets. Meanwhile, USDJPY fails to act as a traditional haven, the Antipodean currencies struggle, and crude oil edges higher.
EURUSD retreats from a three-week high as U.S. Dollar bears pause and Euro traders await updates from President Donald Trump and European Central Bank (ECB) President Christine Lagarde. GBPUSD also eases from a week’s high ahead of UK inflation data, with caution prevailing after a mostly downbeat British employment report. USDJPY remains sidelined for a second day as traders weigh hawkish Bank of Japan (BoJ) signals, rising Japanese government bond (JGB) yields, political moves challenging BoJ rate hikes, and ongoing pressure on the Yen.
AUDUSD stalls after a two-day winning streak, NZDUSD extends gains to a four-day winning streak, while USDCAD seesaws following two consecutive days of declines. Typically, Antipodean currencies weaken during risk-off moves, but a softer U.S. Dollar, China’s stimulus measures, hawkish concerns about the Reserve Bank of Australia (RBA), Reserve Bank of New Zealand (RBNZ) and Bank of Canada (BoC), along with firmer crude oil prices and global credibility of Canada’s Prime Minister Mark Carney, are supporting the Australian, New Zealand, and Canadian Dollars.
Whether due to a softer U.S. Dollar, global economic and political uncertainty, or growing institutional interest, gold and silver hit fresh all-time highs (ATH) early Wednesday, approaching nearly 10% gains in 2026 after a stellar 2025. Bullion buyers are also supported by hopes of no major rate hikes from key central banks amid rising market uncertainty.
Crude oil prices rise on growing supply concerns amid escalating geopolitical tensions, countering Venezuela supply buzz and OPEC+ chatter, ahead of President Donald Trump’s World Economic Forum (WEF) speech and the U.S. weekly oil inventory report from the American Petroleum Institute (API).
Asia-Pacific shares trade mixed after all three major US equity benchmarks posted their steepest declines since October. The S&P 500 fell 2.06%, the Dow Jones Industrial Average dropped 1.76%, and the Nasdaq Composite slid 2.39%. Volatility surged, with the Cboe Volatility Index (VIX) climbing toward 21, reflecting strong demand for protection.
Netflix beat fourth-quarter (Q4) estimates but warned that rising content spending and acquisition costs will weigh on margins before growth re-accelerates. Despite solid cash flow and advertising growth potential, soft margin guidance and paused share buybacks pressured sentiment, pushing the stock lower in after-hours trading.
Cryptocurrencies are recovering from a heavy slump. Bitcoin (BTC) snapped a six-day losing streak after falling the most in two months, while Ethereum (ETH) paused a three-day downtrend following its biggest daily drop since early November, as markets brace for Trump’s speech and the U.S. Dollar selling stalls.
On Wednesday, UK inflation data will lead a series of mid-tier releases from Canada and the U.S., but market focus remains on President Donald Trump’s World Economic Forum (WEF) speech in Davos and European Central Bank (ECB) President Christine Lagarde’s remarks, alongside broader risk developments.
The U.S. Dollar’s inability to rally amid risk aversion may keep major currencies and commodities elevated, while cryptocurrencies and equities face continued pressure. Crude oil could edge higher, and gold and silver are likely to remain firm, supported by risk aversion and strong institutional demand. EUR/USD, however, may retreat if ECB President Lagarde signals caution.
May the trading luck be with you!
