Key Points

• Asia Markets Under Pressure Amid Geopolitics and Rates: Asia-Pacific equities weakened as investors weighed escalating U.S.–Europe tensions over Greenland, mixed China data, and a sharp rise in Japanese government bond yields to multi-decade highs, lifting demand for gold and silver as safe havens.
• China Growth Slows as Consumption Falters: China’s fourth-quarter GDP growth eased to 4.5%, the weakest in nearly three years, with soft retail sales and deepening property investment declines reinforcing expectations for further monetary and credit easing despite headline growth meeting Beijing’s annual target.
• Trump Tariff Threats Test Transatlantic Ties: President Trump’s threat to impose escalating tariffs on eight European nations over Greenland has rattled markets, raising risks to EU-U.S. trade relations, NATO cohesion, and global supply chains amid growing legal and diplomatic pushback.
• Hedge Fund Titans Post Record 2025 Gains: The world’s largest hedge funds delivered a record $115.8 billion in net gains in 2025, led by firms such as TCI, Citadel and Bridgewater, highlighting how scale, diversified strategies and macro opportunities continue to favor industry leaders.

January Economic Calendar

Asia Markets Ease as Greenland Tensions and China Data Weigh on Sentiment

Asia-Pacific markets mostly declined as investors digested rising geopolitical tensions linked to U.S. threats toward Greenland and a fresh batch of Chinese economic data. Hong Kong’s Hang Seng fell over 1%, while Japan’s Nikkei slid nearly 1% as long-dated Japanese government bond yields climbed to multi-decade highs, reflecting tightening financial conditions. China’s latest GDP, retail sales and industrial output figures did little to lift regional risk appetite. Safe-haven demand remained strong, with gold and silver hitting record highs. South Korea stood out as a relative outperformer, buoyed by a sharp rally in Hyundai shares, while broader global markets remained cautious.

China Growth Slows as Consumption Weakness Deepens

China’s economic growth slowed to 4.5% in the fourth quarter, the weakest pace in nearly three years, underscoring persistent pressure from soft domestic demand despite full-year GDP meeting Beijing’s 5% target. December data showed retail sales growth missed expectations, marking the weakest consumption reading since late 2022, while fixed-asset investment fell more sharply as the property downturn deepened. Industrial output offered a modest bright spot, beating forecasts, and markets reacted cautiously, with mainland equities trimming early gains. Policymakers signaled the need for more proactive support, reinforcing expectations that additional monetary easing will be required in early 2026 to stabilize growth and counter deflationary pressures.

Trump Escalates Trade Threats Over Greenland, Raising Transatlantic Tensions

President Donald Trump said the U.S. will impose escalating tariffs on imports from eight European NATO allies unless Greenland is sold to the United States, sharply intensifying geopolitical and trade risks. The tariffs would start at 10% on Feb. 1 and rise to 25% by June, stacking on existing duties and threatening the EU-U.S. trade agreement reached last year. European leaders condemned the move as coercive and destabilizing, with the EU calling an emergency meeting to coordinate a response. Markets are weighing the risk of a renewed transatlantic trade dispute, potential legal challenges in U.S. courts, and broader implications for NATO cohesion and global economic stability.

Hedge Fund Giants Deliver Record Gains as Scale Drives Outperformance

The world’s largest hedge funds posted a record $115.8 billion in net gains for clients in 2025, underscoring the dominance of scale in an industry that also logged its strongest overall dollar performance on record. According to Edmond de Rothschild Capital Holdings, the top 20 hedge fund firms generated nearly 40% of industry-wide profits despite managing less than one-fifth of total assets. TCI led with a historic $18.9 billion gain, while Citadel reinforced its status as the most successful hedge fund firm of all time. Strong equity and bond markets, alongside macro trading opportunities, favored large, diversified platforms, highlighting a widening performance gap between industry leaders and smaller rivals.

Conclusion

Global markets are navigating a complex mix of slowing growth, rising geopolitical risk and shifting capital flows. Asia’s recent weakness reflects unease over higher bond yields in Japan, softer Chinese demand and renewed political uncertainty stemming from U.S.–Europe tensions. China’s data underscore the fragility of domestic consumption and reinforce expectations for further policy support. At the same time, aggressive tariff threats risk destabilizing established trade relationships and adding volatility to global markets. Against this backdrop, the strong performance of large hedge funds highlights the premium investors continue to place on scale, diversification and active risk management in an increasingly uncertain macro environment.

Investment Insights

• Rising geopolitical risk premiums: Escalating tariff threats and political tensions are increasing uncertainty around global trade, favoring diversified portfolios and selective exposure to defensive assets.
• China growth recalibration: Slowing domestic demand and weak investment reinforce expectations for further monetary and fiscal easing, supporting a cautious stance on China-linked cyclicals while favoring exporters and policy beneficiaries.
• Rates and duration risk: Higher Japanese bond yields and global rate volatility argue for careful duration management and selective fixed-income positioning.
• Active management advantage: The outsized gains of large hedge funds highlight the value of scale, flexibility and active strategies in navigating volatile, policy-driven markets.