US markets selloff: Trump's Greenland tariffs, spike in Japanese bond yields rattle the global markets

The US market closed in deep red on Tuesday after threats of a fresh trade war between the US and European nations routed the global markets. President Trump annouced 10% tariffs on eight nations supporting Denmark over the Greenland issue. He further threatened to increase the tariffs to 25% by June 2026. The announcement received sharp criticism and objections from the European leaders, who called the tariffs “blackmail”.

The Dow Jones shed 870 points, or 1.7%, the S&P 500 fell 143 points, or 2%, and the tech-heavy NASDAQ dropped over 2%, the most among all on Tuesday. The selling pressure was also intensified, partly due to a sharp spike in the bond yields. The US 10Y jumped to the highest level in several months, above 4.25%. Further, the dollar index also fell from 99.4 to 98.4 in two trading sessions as pressure on the greenback intensified over deteriorating economic conditions between major global economies and the US.

Part of the selloff was also triggered by the sharp spike in Japanese bond yields as the government plans to adopt expansionary measures by reducing sales tax on food items. Following the announcement, the Japanese bond yields surged nearly 5% to 2.3%, which is the highest level in history. Investors across the globe are closely monitoring the Japanese bond markets as a further hike in the yields could trigger unwinding of carry trades across the globe. Some experts also believe that Tuesday’s sell-off across the globe was predominantly triggered by the unwinding of the yen carry trade.

At the individual level, tech stocks fell the most. Shares of Nvidia (-4%), Broadcom (-5.4%), and Oracle (-5.8%) fell the most as investors reduced their exposure to high-value stocks. On the other hand, the commodity market continued to get investors’ interest amid bleak economic conditions. The gold prices surged past $4,700 an ounce, and silver prices surged past $95 per ounce mark.