The news: Australian shares are set to open lower after the S&P 500 and Nasdaq fell sharply to their lowest levels on Tuesday as investors returned from the Martin Luther King Jr holiday and reacted negatively to renewed tariff threats from Donald Trump against European nations.
Elsewhere, the risk-off move pushed gold to fresh record highs, while US treasuries came under renewed selling pressure.
The numbers: Updated at 7:42am AEDT:
- ASX futures: down 28 points, or 0.31% to 8,806.
- Wall Street: Dow Jones down 1.77%, S&P 500 down 2.02% and the Nasdaq down 1.22%.
- Europe: CAC 40 down 0.61%, DAX down 1.03% and FTSE 100 down 0.67%.
- Spot gold: up 1.54% to USD4,750 per ounce.
- Oil prices: Brent down 0.37% to USD63.85/bbl and US WTI up 0.09% to USD59.39/bbl.
- AUD: up 0.30% at 67.34 US cents.
- Bitcoin: down 3.21% to USD89,687.
The context: US stocks, bonds and the US dollar fell overnight after Trump threatened major European countries with an additional 10% import tariffs, taking total tariffs to 25%, to take effect from 1 February until an agreement is reached for the US to purchase Greenland.
The S&P 500 and Nasdaq broke below their 50-day moving averages, with the S&P 500 sliding 2% and erasing its 2026 gain. Gold, however, climbed above $4,700 an ounce to a record high as investors increasingly sought safe-haven assets.
The sell-off in Japanese bonds also deepened overnight as investors reacted negatively to Prime Minister Sanae Takaichi’s election pledge to cut taxes on food.
Markets have now turned their focus to speeches by global leaders at the World Economic Forum in Davos, Switzerland which runs from 19 to 23 January 2026.
On the data front, the Melbourne Institute is scheduled to release the Westpac-Melbourne Institute Leading Economic Index at 10:30am AEDT, while the Australian Bureau of Statistics will publish the building activity and engineering construction figures for September at 11:30am AEDT.
Elsewhere, Donald Trump is scheduled to address the World Economic Forum in Davos at 12:30am AEDT.