The Overnight Report: Whiff Of Sell America

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US markets were closed for Martin Luther King Day, but with ongoing threats to annex Greenland and weak US futures, European markets fell and precious metals rallied.

ASX200 futures are pointing to another soft start as geo-political uncertainty drives ongoing risk off sentiment ahead of the World Economic Forum in Davos.

Good Morning,

The ASX200 fell -30pts on Monday, down -0.3% to 8,875.

Technology stocks led the market down (off -2.5%). Materials were supported by gold miners and uranium stocks.

What happened overnight, NAB Markets Today Research extract

US markets were closed overnight for the Martin Luther King Day public holiday. but elsewhere there was a renewed whiff Monday of the ‘Sell America’ narrative which gripped market in early April post the liberation day US tariff announcements. 

In overnight Greenland developments, President Trump responded with “no comment” when asked by NBC whether he would use force to acquire Greenland and said he will “100%” follow through on his threats to hit Europe with tariffs in the absence of a deal over Greenland. 

He also claimed that part of the reason for his position on Greenland stemmed from the decision by Norway –as though it controls the process-– not to award him the Nobel peace prize (or ‘Noble’ as he first wrote). Hard to make this stuff up.

German Chancellor Friedrich Merz meanwhile is reportedly trying to persuade French President Emmanuel Macron to tone down his response to US President Donald Trump’s latest threat to slap new trade tariffs on European allies. 

In the face of Macron to request the activation of the European Union’s so-called anti-coercion instrument, Merz said Monday that “France is affected by the American tariffs to a different extent than we are,” Merz told reporters Monday in Berlin, adding that it was therefore understandable that Macron wanted “to react a little more harshly than we do. Nevertheless, we are trying and succeeding in adopting a common position” (before a special EU summit to discuss the next steps on Thursday in Brussels).

This justification is, we have to say, somewhat disingenuous. In 2024, German exports to the United States represented 10.4% of total exports, and from France 0.9% – in the scheme of things a rounding error.

In other European news, Croatia central bank governor Vujic is to be appointed next ECB VP, replacing outgoing VP Louis De Guindos. De Guindos is marked out as a neutral on the ‘hawk-dove’ spectrum, whereas Vujic comes across as little more on the hawkish side.

The only data of note, Canada’s headline CPI for December, came in at 2.4%, up from 2.2% in November, on base effects from the unwinding of a tax holiday last December which depressed CPI. More relevant, the average of the two core measures fell to 2.7% to 2.8% (relative to the 1-3% target range) resulting in marginal lift to (still very low) expectations for further Bank of Canada easing this year.

In Japan, prime minister Takaichi confirmed her intent to dissolve the Diet next week and call a snap election for February 8, a key plank of her election manifesto being a promise of a temporary sales tax cut on food were she to win a fresh mandate.

Incidentally, the newly formed Central Reform Alliance (a combo of ex-LDP partner Komeito and the CDP) is also indicating support for such a cut (if it claims, it could be funded by the earnings from a sovereign wealth fund).

Such actions will have a profound impact on headline CPI (dropping it by more than -1%) while, in the case of the LDPs proposals, contributing further to the looser fiscal policy backdrop that is driving JGB yields ever higher while so far doing nothing to support the Yen.

Yesterday’s China Q4/December data confirmed that 2025 growth targets were met (GDP 5% YTD y/y) but with a third of last year’s growth coming from net exports, a year which saw its trade surplus reach a record US$1.2tn. The monthly December readings saw retail sales growth slip to just 0.9% y/y from 1.3% in November, and fixed asset investment down -3.8% from -2.6% in November.

Industrial production growth held up, 5.2% from 4.8%, but that is what drives the export engine. More policy stimulus is promised, including on the monetary side which could include RRR (reserve requirement ratio) and/or interest rate cut as soon as next month. 

At this stage there is limited confidence this will drive higher consumption, including the ongoing negative wealth effects from house price deflation; for used houses accelerated to -0.7% in December from -0.66% in each of October and November.

In equity markets, US futures traded. Nasdaq is down -1.1% and the S&P400 down – 0.9% (having been -1.3% at worst).

It was a bad day for Eurozone stocks, with no real recovery off the opening crunch lower with the Eurostoxx600 ending down -1.8% while FTSE fared less poorly, on just -0.4%. In Asia the Shanghai CSI300 weathered the Greenland related storm elsewhere to be little changed while the ASX300 broke last week’s winning streak to be down a third of a percent.

Forex saw an APAC open knee-jerk gain for the USD give way to a reversal from mid-morning, one story doing the rounds being suggestions that Europe could (should?) respond to President Trump’s Greenland tariff threat by weaponising its vast holding of US financial assets (amounting to somewhere between US$8 and US$10 trillion).

No mean feat, with most of these held in the private sector, but the notion that Trump’s actions, if pursued, could be the proverbial straw that breaks the camel’s back regarding investor concerns for the rule of law, faith in US institutions and respect for national sovereignty.

Is this one that potentially has legs depending on how events unfold between now and February 1 when the Greenland related tariffs are due to take effect (rising to 25% in June if no ‘deal’)?

Trump’s Davos appearance to put global trade on edge, extract Nigel Green, deVere

Donald Trump’s appearance at Davos this week could have almost immediate and lasting economic consequences for the global economy, as tensions over Greenland move toward a decisive phase.

The warning comes as the European Union holds discussions on imposing retaliatory tariffs on up to EUR93 billion of US goods if the US president follows through on his threat to levy a 10% tariff on European countries. 

Trump has said the tariff rate would rise to 25% unless Europe agrees to a deal involving the purchase of Greenland.

Trump is attending the annual World Economic Forum in Davos on Wednesday, where heads of state, finance ministers, central bankers, and business leaders gather to address global economic stability, trade relations, and geopolitical risk. 

Trump’s presence at Davos fundamentally changes the focus of the summit. Davos is meant to be about coordination and confidence, but Trump will arrive having already put a major territorial dispute at the centre of the global trade conversation. 

Greenland is not a side issue here. It sits directly on the fault line between geopolitics, security, and economic leverage, and that makes it impossible for global leaders to ignore.

The Greenland dispute has the potential to reshape how transatlantic relations are being discussed behind closed doors.

Trade disagreements between allies usually revolve around access, rules, or competitiveness. Tying tariffs to territorial ambition and national security shifts the dynamic entirely. This is why Greenland dominates this summit. It changes the nature of the relationship and raises the stakes for every discussion taking place in Davos.

The EU’s preparation of countermeasures underscores that assessment. EUR93 billion in potential retaliation is not symbolic, it signals readiness. Once countermeasures are designed and quantified, the cost of stepping back increases on all sides.

While the longer-term consequences hinge on policy decisions made in the coming days, markets have already responded to the prospect of escalation.

Markets reacted with speed and force. Gold jumped as much as 2.1% to a record US$4,690 per troy ounce, while silver surged 4.4% as investors rush into havens.

Markets move early, but the more significant effects unfold through trade flows, corporate planning, and government response. Price action captures expectation, not resolution.

Three broad paths ahead are a negotiated pause could limit immediate disruption, but uncertainty would persist because leverage has been established. A partial tariff implementation risks tit-for-tat escalation. A full move to higher tariffs would likely force companies to reassess supply chains and cross-border exposure.

The implications extend well beyond Europe and the US. Transatlantic trade underpins confidence across global supply chains. Disruption there feeds into investment decisions, currency stability, and diplomatic alignment worldwide.

If trade policy becomes an accepted tool for advancing strategic or territorial aims, other regions will take note. That reshapes expectations about how economic relationships function.

Davos therefore represents a pivotal moment rather than a routine summit. Statements made there will be judged against prior threats and subsequent action, not tone.

The Greenland issue now tests how economic influence is wielded in a more contested global environment.  

President Trump will arrive at Davos with the power to reset or harden political risk globally.

What happens next will shape how governments, businesses, and investors judge that risk.

ANZ Bank, Australian Morning Focus, Commodities extract

The precious metal sector saw strong haven buying after Trump renewed efforts to take over Greenland. He warned that he will apply tariffs of 10% on European countries supporting Denmark in its opposition to the move. This would escalate to 25% unless a deal is reached for the purchase of Greenland.

This sparked a sharp reaction, with the European Union in talks to potentially impose retaliatory tariffs on EUR93bn of US goods. Fears of a trade war saw investors seek haven assets such as gold. The precious metal rallied as much as 2.1% to reach another record high, while silver gained more than 4%.

Copper shrugged off a bout of selling late last week to resume its rally as the USD weakened on escalation trade tensions. Economic data from China showed the economy continues to benefit from strong export-driven demand. GDP rose to 5% last year, according to official data.

Net exports of goods and services added almost 33% to last year’s GDP growth. That was more than 2ppt above the level in 2024. However, consumer demand remains sluggish. Fixed asset investment also recorded its first annual decline in data starting almost three decades ago, falling 3.8% in 2025.

Copper ended the session just below US$13,000/t. The near record high has seen consumers look to alternatives. Aluminum output hit a record high of 45.02mt last year, up 2.4% on 2024. However, the upside looks limited as output is now above the country’s capacity limit. This is likely to see demand for copper remain resilient.

Iron ore futures came under pressure after economic data showed a slowdown in steel production. Total crude steel production in December fell -10.3% y/y to 68.18mt. This brought last year’s total to 960.8mt, down -4.4% on 2024 and the lowest annual level since 2018. Ongoing signs of weakness in China’s property market also weighed on sentiment. China’s home prices in 70 cities dropped -0.37% from November, according to data from the National Bureau of Statistics. This is likely to put more pressure on officials to support the market.

Only last month, Chinese leaders vowed to increase policy support, including encouraging the acquisition of existing housing stock to reduce inventories.

Crude oil prices were steady as the market weighs up the impact of Trump’s efforts to annex Greenland. The market is also keeping a close eye on events in Iran. Tensions have eased in recent days, with Trump appearing to back away from his threat to intervene. Iran’s Supreme Leader, Ayatollah Ali Khamenei, acknowledged several thousand people have died in anti-government demonstrations.

And, while he accused the US and Israel of adding to the killings, he said Iran doesn’t intend to push the country toward war. Nevertheless, Kazakhstan’s largest oil producer has temporarily shut production at the Tengiz and Korolev fields as a precautionary measure after two fires at power generators.

European gas prices fell as rising trade tensions with the US reversed last week’s bullish momentum triggered by signs of stronger demand. A fresh set of tariffs on Europe would risk sapping demand for Europe’s manufactured goods. Sentiment was helped by some weather forecasts indicating slightly milder temperatures until the end of January. However, should demand remain elevated, it has little cover. Gas storage sites are only 50% full, well below the seasonal average of 65%. Forecasts of colder weather in North Asia helped push LNG prices higher.

Corporate news in Australia 

-Koala is relaunching its IPO aiming to list in the first half of the year with a $400m valuation and $100m equity raising

-Aware Super invests $460m in Vantage Data Centres APAC for exposure to AI infrastructure growth

-AI consulting boosts Accenture Australia’s revenue to $3bn and growth in profit by 20%

-China buys 60kt of Canadian canola, the first since October, impacting Australia exports

-Gilmour Space achieves $1bn-plus valuation after $217m raising, targeting further rocket launches

-CEFC invests $70m into QIC’s new global infrastructure fund

-Heaps Normal is looking for global investors to fund major expansion

-Private-equity owned IT services company Orro Group is up for sale 

On the calendar today:

-BHP GROUP LIMITED ((BHP)) 1H26 Operational Review

-BLUESCOPE STEEL LIMITED ((BSL)) ex-div 100c

-HUB24 LIMITED ((HUB)) 2Q26 Update

-QORIA LIMITED ((QOR)) Dec Qtr Activity/Update

-TELIX PHARMACEUTICALS LIMITED ((TLX)) 4Q25 Update

FNArena’s four-weekly calendar: https://fnarena.com/index.php/financial-news/calendar/

The Australian share market over the past thirty days…

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