U.S. Stocks May See Further Downside In Early Trading

The major U.S. index futures are currently pointing to a modestly lower open on Wednesday, with stocks likely to see further downside following the sell-off seen in the previous session.

Concerns about a trade war between the U.S. and Europe over President Donald Trump’s efforts to take control of Greenland may continue to weigh on Wall Street.

Early trading may also be impacted by reaction to remarks by Trump at the World Economic Forum in Davos, Switzerland, where the president is currently speaking.

After ending last Friday’s choppy trading session modestly lower, stocks showed a more substantial move to the downside during trading on Tuesday. The major averages all moved sharply lower, adding to the losses posted last week.

The major averages saw further downside late in the session, closing near their worst levels of the day. The Dow slumped 870.74 points or 1.8 percent to 48,488.59, the Nasdaq plunged 561.07 points or 2.4 percent to 22,954.32 and the S&P 500 tumbled 143.15 points or 2.1 percent to 6,796.86.

The sell-off on Wall Street came amid the renewed concerns about a trade war between the U.S. and Europe over Trump’s efforts to take control of Greenland.

Trump has threatened to impose new tariffs on several European nations if they oppose his attempt to purchase the Danish territory, which he claims is imperative for national security.

In a post on Truth Social, Trump announced plans to impose a 10 percent tariff on imports from Denmark, Norway, Sweden, France, Germany, the U.K., the Netherlands and Finland beginning February 1st.

Trump said the tariffs would be increased to 25 percent beginning June 1st and would remain in place until a deal is reached for the U.S. to purchase Greenland.

“Comments from the US president that there is ‘no going back’ on Greenland have sent US indices down sharply today as the world tries to figure out whether this is another example of strategic game-playing masked by bluster, or if he is deadly serious about a land grab from a NATO ally,” said AJ Bell head of financial analysis Danni Hewson.

She added, “There is no certainty that the temperature can be turned down this time, and the continued surge in the price of gold suggests many are hoping for the best but looking to further pad out portfolios with safe haven assets.”

Housing stocks turned in some of the market’s worst performances on the day, dragging the Philadelphia Housing Sector Index down by 2.5 percent.

Significant weakness was also visible among airline stocks, with the NYSE Arca Airline Index tumbling by 2.4 percent.

Networking, brokerage and retail stocks also saw considerable weakness, while gold stocks moved sharply higher along with the price of the precious metal.

Commodity, Currency Markets

Crude oil futures are climbing $0.43 to $60.79 a barrel after surging $1.02 to $60.36 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $4,874.50, up $108.70 compared to the previous session’s close of $4,765.80. On Tuesday, gold soared $170.40.

On the currency front, the U.S. dollar is trading at 157.88 yen compared to the 158.15 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is valued at $1.1732 compared to yesterday’s $1.1724.

Asia

Asian stocks followed Wall Street lower on Wednesday as risk aversion gripped financial markets on the back of rising bond yields and U.S. President Donald Trump’s renewed push to acquire Greenland.

Spot gold jumped nearly 2 percent to touch a new record high above $4,800 an ounce in Asian trading after the U.S. dollar suffered its biggest fall in over a month overnight on fears of offshore selling of U.S. assets – the so-called “Sell America” trade.

There were reports that a Danish pension fund plans to sell all its U.S. Treasury bonds by the end of this month.

Oil prices fell more than 1 percent on persistent concerns about global oversupply and receding risks from a Kazakh production halt.

China’s Shanghai Composite Index finished marginally higher at 4,116.94 after a choppy session. Hong Kong’s Hang Seng Index closed up 0.4 percent at 26,585.06.

Japanese markets ended lower amid worries about the country’s bond market after a sell-off pushed yields to all-time highs.

Japanese Finance Minister Satsuki Katayama called for market participants to “calm down” and defended the government’s fiscal approach in an interview with Bloomberg TV.

The Nikkei 225 Index dropped 0.4 percent to 52,774.64, extending losses for a fifth straight session. The broader Topix Index settled 1 percent lower at 3,589.70, with financials leading losses.

Seoul stocks ignored tariff jitters to hit another record high after data showed South Korean exports rose 14.9 percent year over year in the first 20 days of January, led by a 70 percent jump in semiconductor shipments.

Traders also reacted to a Bloomberg report that said South Korea will delay fulfilling its investment commitment of up to $20 billion in the U.S. due to currency pressure.

The Kospi climbed 0.5 percent to 4,909.93. Market heavyweight Samsung Electronics rallied 3 percent to a record close. Likewise, Hyundai Motor soared 14.6 percent to a record on optimism around its humanoid robot push.

Australian markets ended slightly lower to extend losses for a third day and close at a one-week low. The benchmark S&P/ASX 200 Index fell 0.4 percent to 8,782.90, with banks declining on prolonged rate worries. The broader All Ordinaries Index ended down 0.3 percent at 9,108.60.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index slumped 1.2 percent to 13,417.17, marking a third consecutive session of losses.

Europe

European stocks have moved mostly lower during trading on Wednesday, with ongoing trade jitters linked to Greenland keeping investors on edge.

In economic news, U.K. consumer price inflation accelerated more than expected in December, official data revealed.

The consumer price index posted annual growth of 3.4 percent in December after rising 3.2 percent in November, the Office for National Statistics said. Inflation was expected to climb to 3.3 percent.

While the German DAX Index is down by 1.4 percent, the French CAC 40 Index is down by 0.6 percent and the U.K.’s FTSE 100 Index is down by 0.1 percent.

Webuild Group shares have risen. Its U.S. subsidiary, with its joint venture partner, Superior Construction, has signed contracts totaling $643 million to build the Westshore Interchange in Florida.

Barry Callebaut, one of the world’s top cocoa processors, has surged after it appointed former Unilever boss Schumacher as its new CEO.

Fund manager Aberdeen has also jumped despite reporting net outflows of 3.9 billion pounds ($5.24 billion) for 2025 due to budget uncertainty.

Burberry Group shares have also soared. The fashion house reported that retail like-for-like sales rose 3 percent in its third quarter, beating market expectations.

Sportswear retailer JD Sports has also shown a strong move to the upside after reporting mixed Christmas trading performance.

Meanwhile, credit data and analytics company Experian has moved sharply lower after keeping its full-year expectations unchanged.

U.S. Economic News

The National Association of Realtors is due to release its report on pending home sales in the month of December at 10 am ET. Pending home sales are expected to dip by 0.3 percent in December after spiking by 3.3 percent in November.

Also at 10 am ET, the Commerce Department is scheduled to release its report on construction spending in the month of October. Construction spending is expected to inch up by 0.1 percent.

The Treasury Department is due to announce the results of this month’s auction of $13 billion worth of twenty-year bonds at 1 pm ET.