20/01/2026 Daily Reports
Japan’s Nikkei continued to slide for a fourth consecutive session as rising domestic fiscal concerns pushed government bond yields to record highs, pressuring equity valuations. Political uncertainty increased after Prime Minister Sanae Takaichi called a snap election for early February and pledged to suspend the sales tax on food, a move that raised worries over fiscal discipline and debt sustainability. Higher yields acted as a headwind for Japanese equities, marking the index’s longest losing streak in nearly two months.
Global sentiment also remained fragile amid renewed trade tensions between the United States and Europe. While U.S. markets were closed, European stocks weakened following fresh tariff threats from Washington, a move that spilled over into Asian trading. With investors increasingly sensitive to both geopolitical risks and interest rate dynamics, Japanese equities remain vulnerable in the near term, with market direction likely hinging on election outcomes, bond market stability, and the broader tone of global trade relations.
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- USD Weakness as a Catalyst: Despite escalating trade tensions between the US and EU over President Trump’s Greenland demands, a weaker US Dollar has provided a significant tailwind for the broader commodities complex.
- Gold & Silver Hit Records: Geopolitical shocks—including the US arrest of Venezuela’s leader and uncertainty over Greenland—have sent Gold and Silver to fresh all-time highs. Investors are increasingly favoring precious metals over currencies due to concerns about Fed independence and rising US debt.
- Energy Supply Disruptions:
* Kazakhstan: Production at the massive Tengiz and Korolev fields (approx. 890k b/d) was temporarily halted following fires at power generators.
- EU Ban: A new ban on refined products produced from Russian oil takes effect tomorrow (January 21), potentially disrupting middle distillate flows from India to Europe.
- Copper’s Resurgence: Copper is rebounding toward $13,000/t, fueled by a weaker Dollar and stabilization in Chinese demand.
- Inventory Normalization: For the first time since September 2025, copper inventories in US LME warehouses have risen. This suggests that the extreme, tariff-driven market distortions seen throughout 2025 are finally beginning to normalize.
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