Markets slide after Greenland tariff warning
European stock markets retreated sharply on Monday after U.S. President Donald Trump threatened to impose new tariffs on eight European countries as part of his renewed push to pressure Denmark over Greenland. Major indices across the region recorded losses of more than 1%, reflecting growing investor unease over escalating geopolitical and trade tensions.
Germany’s DAX, France’s CAC 40 and Italy’s FTSE MIB all declined by over 1%, while the pan-European STOXX 600 also moved lower. In the UK, the FTSE 100 fell 0.4% to 10,194, underperforming continental peers but still reflecting broader risk aversion.
Safe-haven assets hit record highs
As equities weakened, investors shifted decisively toward safe-haven assets. Gold prices surged 1.6% to $4,671 an ounce, after briefly touching an all-time high of $4,689. U.S. gold futures for February gained 1.7%, underlining strong demand for protection against political and economic uncertainty.
Silver also rallied sharply, climbing to a record $94.08 an ounce before easing slightly to $93.15, still up 3.6% on the day. Analysts pointed to heightened geopolitical risk as a key driver behind the move into precious metals.
Carmakers and tech stocks under pressure
European carmakers were among the hardest hit sectors. Shares in Volkswagen, BMW and Mercedes-Benz fell between 2.5% and 4%, while Stellantis dropped around 2%. The auto sector’s exposure to U.S. tariffs left it particularly vulnerable to Trump’s weekend comments.
Although U.S. markets were closed for Martin Luther King Jr. Day, U.S. technology stocks listed in Europe also declined. Alphabet fell 2.2% in Frankfurt, while Nvidia and Microsoft dropped 2.9% and 1.6%, respectively. The U.S. dollar weakened 0.3% against a basket of currencies.
Tariff escalation fuels economic concerns
Trump said he would impose a 10% tariff on goods from Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands and Finland starting February 1, with rates rising to 25% by June unless a deal is reached over Greenland. Economists warned the move could undermine investment and trade flows.
ING estimates that additional tariffs could shave 0.2 percentage points off European GDP growth. Capital Economics warned the UK could be hit harder, with GDP potentially falling by up to 0.75% in a worst-case scenario, raising the risk of recession.
Outlook hinges on Trump’s next moves
While some analysts believe negotiations could delay or soften the measures, others caution that uncertainty will persist. EU officials are reportedly preparing retaliatory steps should the tariffs be implemented. Market strategists said Trump’s tone at upcoming international forums will be closely watched for signals on whether tensions will ease or escalate further.
