Asian stocks slide, silver hits record amid fears of US-EU trade clash

Asian equity markets fell further on Tuesday and silver climbed to a fresh record as investors grew increasingly concerned about the risk of a trade war between the United States and Europe linked to President Donald Trump’s threats over Greenland.

Market sentiment has deteriorated after an initially strong start to the year driven by optimism around artificial intelligence. Confidence has since weakened as Trump intensified pressure on Denmark over the autonomous territory, arguing it is vital for US national security.

After European governments rejected his demands, Trump announced on Saturday that Washington would impose 10 percent tariffs from February 1 on imports from eight countries, including Denmark, France, Germany and the United Kingdom. He warned the levies would rise to 25 percent from June 1 if no agreement is reached.

The move has cast doubt on last year’s US-EU trade deal, while French President Emmanuel Macron has urged the use of a powerful but unused EU mechanism designed to counter economic coercion. US Treasury Secretary Scott Bessent responded on Monday by saying any EU retaliation would be “unwise.”

Fears of another trade confrontation between two of the world’s largest economies triggered a rush into safe-haven assets and weighed heavily on riskier investments. Following sharp losses in Europe, Asian markets also declined, with shares in Tokyo, Hong Kong, Shanghai, Sydney, Seoul, Singapore, Taipei, Manila and Wellington all trading lower.

Silver surged to a new all-time high of $94.73 an ounce during Asian trading, while gold hovered just below the record it reached a day earlier. US Treasury yields climbed as investors pulled back from US assets amid uncertainty created by Trump’s latest comments.

Japanese government bond yields also rose, with the 40-year bond yield hitting its highest level since its launch in 2007. The move followed Prime Minister Sanae Takaichi’s announcement of snap elections and a pledge to cut food taxes for two years, raising concerns about increased government borrowing.

Her cabinet has approved a record 122.3 trillion yen budget for the fiscal year starting April 2026, aimed at tackling inflation and supporting the world’s fourth-largest economy, though questions persist over Japan’s fiscal health.

Attention is now turning to Davos, Switzerland, where Trump is expected to speak at the World Economic Forum. Analysts warn that escalating tensions could fuel further market volatility and strain the transatlantic alliance at a sensitive geopolitical moment.