Paris dropped 1.8%, Amsterdam 1.7%, Berlin 1.3%, Zurich 1%, and London 0.4%. European bourses opened the week in steep decline, after President Donald Trump issued what amounts to an ultimatum: sell me Greenland or face the consequences - namely, a fresh round of tariff hikes. After initial disbelief, markets now appear to be entering a phase of correction, struggling still to grasp the full implications of the moment. As Wall Street Journal columnist James Mackintosh aptly put it overnight: "Markets don't know what to make of it… The new world order may be so difficult to conceive that investors prefer to ignore it." Though perhaps already outdated, the phrase captures a mood of quiet disorientation.

Not all investors are in denial, however. The US bond market, for one, is showing clear signs of discomfort. Across the aisle from exuberant equity traders sit the more sombre participants of the fixed income universe - suited, serious, and risk-averse. These investors often act as guardians of financial orthodoxy: rarely vocal, but when they do speak, markets listen. One recalls how, back in April, the so-called bond vigilantes compelled Trump to backtrack on his initial tariff schedule. Their message came through a sell-off in US Treasuries, driving yields abruptly higher: a real-time indication that confidence in American creditworthiness was faltering.

The current market reaction, midway through January, is less dramatic, but telling nonetheless. The rise in Treasury yields over the weekend suggests bondholders are unimpressed with recent developments. The underlying logic is straightforward: the Fed's independence is under threat, the White House is alienating its biggest creditors (the European bloc holds the largest stock of US Treasuries), demand for US debt weakens, funding costs rise, fiscal conditions deteriorate, debt servicing costs surge - and so the vicious circle begins. Market nerves are further frayed by looming developments: Supreme Court rulings on the legality of Trump's tariffs and the removal of Lisa Cook from the Federal Reserve Board, the appointment of Jerome Powell's successor, and Trump's keynote address at the World Economic Forum in Davos on Wednesday. The VIX volatility index, which had been oddly subdued in recent days, has risen 3%, approaching the 20-point mark that traditionally separates routine stress from more unusual tension.

Today's session will thus be dominated by these frictions, alongside the reopening of Wall Street following the holiday (futures point sharply lower, though much may change by the 15:30 open). A raft of US earnings reports is also on the docket, with Netflix, 3M Company, US Bancorp, Fastenal, DR Horton, and United Airlines all due to report.

In Asia-Pacific, Korea's KOSPI failed to extend its winning streak to a 13th consecutive session. The region's standout index of 2025 and early 2026 finally dipped, closing 0.4% lower. Red ink was spread across the region — from a modest 0.1% decline in Hong Kong to a sharper 1.1% fall in Tokyo, where 40-year Japanese government bonds touched a 4% yield, a level unseen since their inception in 2007. Europe, too, is expected to open lower this morning.

Today's economic highlights:

On today's agenda: the 1-year and 5-year Loan Prime Rates in China; in the United Kingdom, employment change, average earnings including bonus, and the unemployment rate; in Germany, the annual PPI; in Spain, the balance of trade; in China, the year-to-date FDI; the ZEW Economic Sentiment Index for the Euro Area and Germany; in the United States, the API crude oil stock change. See the full calendar here.

  • GBP / USD: US$1.34
  • Gold: US$4,711.7
  • Crude Oil (BRENT): US$63.94
  • United States 10 years: 4.27%
  • BITCOIN: US$90,908.5

In corporate news:

  • AO World's CEO sold shares valued at £2.6 million.
  • National Grid's Chief People Officer, Will Serle, executed a sale of company shares.
  • Prospex Energy PLC raises funds through GCC convertible loan notes to invest in a seismic programme.
  • Meta Platforms is being criticized by the UK Gambling Commission for allowing illegal online casino advertisements on Facebook and Instagram.
  • Patrick Drahi is nearing the completion of a €9 billion sale of XpFibre.
  • Henkel is in non-exclusive talks with Wendel SE regarding a potential acquisition of Stahl.
  • MPS and Mediobanca continue discussions over a potential merger, with government support for the MPS CEO.
  • TF Bank exceeded expectations with a higher operating profit and increased its dividend.
  • Kjell Group AB announces a directed share issue of SEK 60 million and a rights issue of SEK 145.5 million to raise capital.
  • EQT Life Sciences and Gimv have raised €51 million to fund Exciva's Phase-2 study of Deraphan for treating agitation in Alzheimer's patients.
  • Nordea raises its target price for Vestas to DKK 210, reaffirming a buy rating.
  • Adeas Homes reports an increase in net profit following its acquisition.
  • Hewlett Packard Enterprise appointed a new Chief Financial Officer, Jeremy Cox, effective November 1, 2023.
  • A proxy fight is occurring at Lululemon involving the removal of Advent from the board.

See more news from UK listed companies here

Analyst Recommendations:

  • Hunting Plc: Investec maintains its hold recommendation and raises the target price from GBX 330 to GBX 440.
  • Intercontinental Hotels Group Plc: Berenberg upgrades to buy from hold and reduces the target price from GBX 9200 to GBX 157.
  • Whitbread Plc: Berenberg downgrades to hold from buy with a target price of GBX 2900.
  • Wh Smith Plc: Berenberg maintains its hold recommendation and reduces the target price from GBX 700 to GBX 657.
  • Next Plc: BNP Paribas maintains its neutral recommendation and reduces the target price from GBX 14400 to GBX 14100.
  • Man Group Plc: Citi maintains its neutral recommendation and raises the target price from GBP 1.90 to GBP 2.75.
  • Pagegroup Plc: Morgan Stanley maintains its underweight recommendation and reduces the target price from GBX 215 to GBX 195.
  • Hays Plc: Morgan Stanley maintains its underweight recommendation and reduces the target price from GBX 50 to GBX 44.
  • Unilever Plc: HSBC maintains its hold recommendation and reduces the target price from GBP 50.347 to GBP 48.