Asian Markets Opened Lower On Trump's Greenland Narrative

Global markets navigated a complex landscape of political maneuvering and central bank signaling last week. While the U.S. grappled with a volatile start to the earnings season, Asian markets were electrified by a surprise election call in Japan and targeted stimulus efforts from Beijing. More to come as President Trump loaded up on his Greenland narrative by threatening more tariffs on European partners over the long weekend.

1. United States: S&P 500

U.S. Equities concluded a turbulent week with $E-mini S&P 500 Futures (MAR6) (ESmain.US)$closing marginally lower by 0.40% as investors headed into a long holiday weekend. $E-mini NASDAQ 100 Futures (MAR6) (NQmain.US)$ also closed 0.96% lower, as the markets officially kicked-off the earnings season.

Regulatory Headwinds: While major banks such as ( $Bank of America (BAC.US)$, $Morgan Stanley (MS.US)$ and $Goldman Sachs (GS.US)$) reported generally solid results, the sector faced significant pressure from President Trump’s proposed one-year, 10% cap on credit card interest rates. This policy concern contributed to a weekly decline for the broader Financials index.

Market Rotation: A notable shift occurred as capital moved out of heavyweight technology names into more undervalued areas. Consequently, mid-cap and small-cap stocks outperformed the S&P 500.

Fed Speculation: Sentiment was further influenced by news that President Trump may retain economic adviser Kevin Hassett in his current role. This development cooled market expectations that Hassett would be tapped to succeed Federal Reserve Chair Jerome Powell.

Chipmaker Resilience: One bright spot remained in the semiconductor sector, with the $PHLX Semiconductor Index (.SOX.US)$ extending gains late in the week.

2. Japan: TOPIX

The Japanese market was dominated by a sudden shift in the political landscape which also spilled over to the Asian markets. Japanese indices, $OSE Nikkei 225 Futures (MAR6) (NK225main.JP)$ and $TOPIX Futures (MAR6) (TOPIXmain.JP)$ were both up by nearly 4%. This reflected heightened investor anticipation following reports that Prime Minister Sanae Takaichi intends to dissolve parliament on January 23, setting the stage for a general election as early as February 8.

"Takaichi Trade": Equities strategists at Nomura noted that an early election is widely interpreted as a precursor to proactive fiscal spending. This outlook spurred expectations of a weaker JPY and higher equity valuations.

Automotive Rally: The transport equipment sector emerged as the top performer among the TSE’s 33 industry groups. Sector heavyweights led the charge, with $Toyota Motor (7203.JP)$ surging 7.5% and $Subaru (7270.JP)$ gaining 4.1%.

3. China: Hang Seng Index (HSI)

Chinese markets showed a marked divergence this week. While the $HSI Futures (FEB6) (HSImain.HK)$ added 2.24% last week, mainland benchmarks such as $CSI 300 Index (000300.SH)$ closed 0.57% lower, clawing back some gains.

Regulatory Tightening: Mainland sentiment cooled after regulators announced they would raise the minimum margin requirement for new borrowings to 100% (up from 80%), effective January 19. This move, alongside a vow to crack down on "excessive speculation," weighed on the Shanghai Composite and CSI 300.

Monetary Support: To counter the tightening, the People’s Bank of China (PBOC) cut sector-specific interest rates on Thursday. UBS economists described the move as a "positive surprise," providing a clear signal that policy loosening remains necessary to reflate the economy.

4. Singapore: STI

The $FTSE Singapore Straits Time Index (.STI.SG)$ closed the week on a confident note, rising 0.3% on Friday to finish at 4,849.10. This capped a robust weekly gain of 2.2%, as the local bourse benefitted from resilient regional sentiment and a positive boost as fresh market initiatives kicked in.

Banking and Property Lead: The "trio" of local banks: $DBS (D05.SG)$, $UOB (U11.SG)$, and $OCBC Bank (O39.SG)$ all finished higher, supporting the index's climb. $CityDev (C09.SG)$ was the top blue-chip performer, gaining 2.3% on Friday alone.

Sector Laggards: Conversely, the shipbuilding sector faced headwinds, with $Seatrium Ltd (5E2.SG)$ and $YZJ Shipbldg SGD (BS6.SG)$ ending the week as the index's worst performers.

5. Malaysia: KLCI

The $FTSE Bursa Malaysia KLCI Index (.KLSE.MY)$ experienced a week of two halves, ultimately closing the week 1.55% higher. After hitting fresh multi-year highs earlier in the week, the index faced a bout of profit-taking on Friday.

Economic Optimism: Market sentiment was supported by advance estimates for 4Q 2025 GDP, which exceeded consensus expectations and reinforced the case for a resilient domestic economy.

Corporate Developments: High-profile gains were seen in $NESTLE (4707.MY)$ and $PETGAS (6033.MY)$.

Prepared by:

Moomoo Singapore
Isaac Lim CMT, CFTe
Chief Market Strategist

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