Asian Stocks Trim Losses, Japanese Bonds Rebound: Markets Wrap

(Bloomberg) — Japanese bonds rebounded from a selloff and US equity-index futures edged higher as markets showed signs of easing after a bout of global volatility.

Japan’s 40-year bond yield fell six basis points after Finance Minister Satsuki Katayama called for calm after a rout that had pushed yields to all-time highs. Treasuries also recovered part of their losses, and US equity-index futures rose 0.3% after the S&P 500 posted its steepest loss since October.

Asian shares edged 0.2% lower, with Japanese shares well off their session lows. Haven demand continued with gold rising to yet another record high and silver trading near an all-time peak.

President Donald Trump’s threat to impose tariffs on European nations that rejected his proposal to purchase Greenland has unsettled markets, prompting investors to reassess risk. The selloff in Japanese bonds compounded the pressure, adding to strains driven by uncertainty over US policy and trade.

“Tariff War 2.0, or Territory War 1.0 if you prefer, is in full swing and has potential to cause significant near-term market disruptions,” said Victoria Greene at G Squared Private Wealth. “A lot depends on how the next few weeks play out. So, we are not ‘panic selling,’ but watching carefully and ready for volatility.”

The global market selloff on Tuesday was first triggered by domestic issues in Japan, where yields on 30-year debt surged over a quarter percentage point on concerns about Prime Minister Sanae Takaichi’s plans to cut taxes and boost spending.

The jump threatened to unravel so-called carry trades — which involve buying global assets with low-interest loans in Japan — and helped push up bond yields elsewhere.

However, the rebound in Japanese sovereign debt early Wednesday has begun to ease concerns.

“Japanese government bonds are settling and are bid across the board with yields ticking lower,” said Andrew Jackson, the head of Japan Equity Strategy at Ortus Advisors Pte in Singapore. “While they remain highly elevated after yesterday’s surge, with banks and insurance names also coming down, it feels like the worst is behind us as far as the JGB meltdown.”

Long-term US yields had hit a four-month high in the US session with the 30-year gaining eight basis points as investors reacted to the rout in Japanese bonds.

Then there was also news that a Danish pension fund was planning to exit Treasuries. The fund, AkademikerPension, said it will exit US Treasuries by the end of the month amid concerns that the Trump administration has created credit risks too big to ignore.

JPMorgan Asset Management’s Bob Michele said the selloff in markets is a message to President Donald Trump’s administration to take action to restore calm as officials did after Liberation Day tariffs rattled investors last year.

“Despite elevated macro noise — from renewed trade-war rhetoric to rising global yields — flow has consistently pointed to monetization of hedges and volatility selling, not panic buying,” wrote Chris Murphy, derivatives strategist at Susquehanna International Group LLP.

Treasury Secretary Scott Bessent also urged calm, comparing the uproar over Greenland to what he called the “hysteria” that followed Trump’s announcement in April of sweeping tariffs. Trump is expected to arrive in Davos for the World Economic Forum on Wednesday.

While traders have been able to get past a whirlwind of other unexpected developments this year — including the White House’s capture of Venezuela’s leader and its renewed attacks on the Federal Reserve — the size of the moves suggests that investors’ willingness to shrug off earlier shocks is beginning to erode.

“We haven’t yet made it through the first month of 2026, and already trade wars and tariffs are giving financial markets grief,” wrote Tim Waterer, chief market analyst at KCM Trade.

Corporate News:

Netflix Inc.’s shares fell after warning of higher program spending and the cost of closing its deal with Warner Bros. United Airlines Holdings Inc. beat Wall Street estimates for the fourth quarter and anticipates a strong 2026, driven by demand from high-spending domestic passengers and international travelers. Kraft Heinz fell 4.2% in after-hours after the food company registered up to 325 million shares for potential sale by holder Berkshire Hathaway. Some of the main moves in markets:

Stocks

S&P 500 futures rose 0.3% as of 10:48 a.m. Tokyo time Nikkei 225 futures (OSE) were little changed Japan’s Topix fell 0.8% Australia’s S&P/ASX 200 fell 0.3% Hong Kong’s Hang Seng was little changed The Shanghai Composite rose 0.2% Euro Stoxx 50 futures fell 0.2% Currencies

The Bloomberg Dollar Spot Index fell 0.1% The euro was little changed at $1.1731 The Japanese yen rose 0.1% to 157.92 per dollar The offshore yuan was little changed at 6.9588 per dollar The Australian dollar was little changed at $0.6742 Cryptocurrencies

Bitcoin fell 0.4% to $88,969.23 Ether fell 0.8% to $2,966.91 Bonds

The yield on 10-year Treasuries was little changed at 4.28% Japan’s 10-year yield declined three basis points to 2.340% Australia’s 10-year yield was little changed at 4.78% Commodities

West Texas Intermediate crude fell 1.1% to $59.72 a barrel Spot gold rose 1.3% to $4,824.34 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Joanna Ossinger and Abhishek Vishnoi.

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