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Investors are also weighing fresh US tariff threats on Greenland as yields on long-term Japanese government bonds hit new highs in Asia-Pacific markets.
European nations are debating counter-tariffs and broader economic sanctions in response to new tariff threats from President Donald Trump that could further strain relations with Greenland.
On Saturday, Trump announced that exports from the eight European countries would start at 10% on February 1 and rise to 25% on June 1 if negotiations fail to secure US control of the mineral-rich, semi-autonomous island controlled by Denmark.
Hong Kong’s Hang Seng index futures were at 26,640, higher than the HSI’s last close of 26,563.9. China’s central bank kept lending rates unchanged on Tuesday. The People’s Bank of China kept the key 1-year and 5-year lending rates at 3% and 3.5%, respectively, unchanged for the eighth straight month.
Investors are closely watching developments in Japanese markets after Prime Minister Sanae Takaichi announced on Monday that he plans to dissolve parliament and hold snap elections on February 8.
of Japan Nikkei 225 It fell 0.7%, while the Topix fell 0.52%. South Korea’s Kospi fell 0.41%, while the smaller Kosdaq traded flat.
The yield on Japan’s 40-year government bond rose to 4% for the first time.
Japan’s ruling coalition held a one-seat majority in the Lower House after forming in October, when Takaichi became prime minister after his predecessor resigned. While snap elections will increase political uncertainty in the near term, if a government with a strong mandate emerges, it could bring policy clarity, Fitch Group said in a note.
Fitch expects public debt to remain elevated over the medium term, but to gradually decline as stronger nominal GDP growth offsets wider budget deficits and higher borrowing costs.
Consolidated gross government debt is projected to ease to a midpoint of 190% of GDP by fiscal 2029, down from a projected 199.5% in fiscal 2025 and a peak of 222% in fiscal 2020.
Australian S&P/ASX 200 lost 0.46%.
U.S. stock futures pointed to a lackluster session on Wall Street as Trump stepped up his rhetoric on Greenland.