MARKET WRAPS
European stocks fell Monday losing ground to Friday's higher close as investors face the prospect of fresh trans-Atlantic trade tensions.
The region's leading indexes including the FTSE 100, the CAC 40 and the DAX posted declines at the opening bell. Gold and silver rose, raising Europe's mining stocks but bank and luxury shares slipped.
The region's car manufacturers too weren't spared, but European defense stocks surged amid heightened tensions between the U.S. and Europe.
Trump used the weekend to threaten new 10% tariffs beginning next month on Denmark, Norway, Sweden, France, Germany, the U.K. the Netherlands and Finland as part of a pressure campaign to force European powers to acquiesce to his demands for Greenland.
He added those tariffs would rise to 25% on June 1 until a deal was reached for the purchase of the arctic island, leading European officials to consider the use of their so-called trade bazooka against the U.S.
If enacted, Trump's tariffs would have a modest economic impact , but they'd pose far more serious political and geopolitical consequences to the NATO alliance, according to Capital Economics, which adds the U.K. and Germany would be the hardest hit economically.
The threat of additional tariffs prompted strong statements from Germany's engineering and machinery industry group and the country's b usiness lobby .
Though the threat of tariffs marked a dramatic escalation, Pepperstone is of the view the move is another Trump gambit to extract concessions, adding that investors ought to expect near-term choppiness followed by a relief rally when another "TACO" moment arrives.
Jefferies, however, argues it doesn't think Trump will reverse his policy regarding the tariffs.
All of this as world leaders meet this week in Davos.
Economic Insight
The hit to GDP by Trump's Greenland-related tariffs could be as much as half a percentage point , Goldman Sachs said.
A 10% tariff would lower GDP by 0.1-0.2 points in the affected countries, rising to 0.25-0.5 points for a 25% tariff.
U.S. Markets:
U.S. markets are closed Monday as the country honors Martin Luther King Jr.
Forex:
The euro recovered after briefly reaching a seven-week low against the dollar overnight.
So far the market reaction is relatively modest, Danske Bank said, adding this might be partly because the Supreme Court is soon expected to strike down Trump's tariffs.
The Swiss franc rose against the euro as Trump's threat to impose 10% tariffs against several European nations drove investors to safe-haven assets.
The dollar , meanwhile, fell against a basket of currencies and Commerzbank said the dollar's status as the world's reserve currency was at risk.
Cryptocurrencies began lower at the start of the week as tariff threats over Greenland weighed on sentiment already affected by rising tensions between crypto firms, banks and regulators, according to IG.
Bonds:
Eurozone government bond yields declined in early trade.
"We open the week with a flurry of geopolitical headlines and renewed trade tensions which should challenge the strongly positive risk sentiment we've seen in markets over recent weeks," ING said.
Yields on U.K. government bonds edged lower amid demand for safe-haven assets. Investors also await U.K. labor market data and inflation data this week.
Treasurys are attractive to buy in phases of weakness due to potential further interest-rate cuts under the Federal Reserve's next Chair, Citi said, adding that Kevin Warsh now looked to be the front-runner for the next Fed Chair.
"While the lack of action in the rates markets points potentially more to paralysis than analysis, the past does not offer a lot of hope for the next two weeks," Natixis said , adding that since the first week of December, U.S. Treasury yields have been remarkably range-bound.
Energy:
Oil prices fell , weighing on Europe's energy stocks , thanks to a broader risk-off tone across markets
"Structurally, crude remains under pressure from expectations that supply will outpace demand this year, although pockets of tightness persist, including shortages from Kazakhstan due to Black Sea disruptions," MUFG said.
Gas
European natural-gas prices fell on profit-taking and prospects of additional LNG supply.
Metals:
Precious metals surged to fresh records, driven by investor demand for safe-haven assets. In early trading, gold futures in New York rose 1.7%, silver climbed 5.1%
"Combined with ongoing Iran risks, concerns about Fed independence, and investor aversion to the dollar and U.S. government bonds amid rising fiscal debt worries, the underlying demand for hard assets remains firm, " Saxo Bank said.
Geopolitical tensions have added to an already bullish outlook for gold and silver in 2026, HDFC Securities said.
EMEA HEADLINES
Bayer Shares Rise After U.S Supreme Court Agrees to Review Roundup Case
Shares in Bayer rose on Monday after the U.S. Supreme Court said it would take an appeal from the German conglomerate, agreeing to hear its challenge to litigation that claims its flagship weedkiller Roundup causes cancer.
In European morning trading, shares were 7% higher at 44.42 euros.
U.K. House Prices See Record January Jump as Post-Budget Uncertainty Fades
U.K. asking prices for residential property rose at a record pace in January, according to data from property website Rightmove, suggesting market sentiment is rebounding following the volatility sparked by the U.K. government's budget.
Average asking prices increased 2.8% on month to 368,031 pounds ($492,425), the online real-estate platform said. The gain represents the largest January increase in the 25-year history of Rightmove's House Price Index and the sharpest on-month jump for any month since June 2015.
Train Collision in Spain Kills at Least 39
A collision between two high-speed trains in southern Spain on Sunday has killed at least 39 people and injured dozens, according to the country's transport minister.
The crash occurred at around 7:45 p.m. local time when the final cars of a train heading to Madrid derailed and went onto an adjacent track, where they were struck by a train heading in the opposite direction, Spanish Transport Minister Óscar Puente said.
Syrian President Forces Major Concessions From U.S.-Backed SDF in Cease-Fire Deal
Syria's president forced major concessions from the U.S.-backed Kurdish-led militia that has dominated the northeast of his country, after launching a lightning offensive to seize strategic assets from the group and announcing a cease-fire.
President Ahmed al-Sharaa signed a deal with the Syrian Democratic Forces that called for the integration of individual militia members into the Syrian army and interior ministry.
GLOBAL NEWS
Trump's Realpolitik Takes Over Davos
DAVOS, Switzerland-President Trump video-conferenced into the World Economic Forum a year ago demanding lower interest rates from the global elites gathered and threatening tariffs against those making products anywhere but America.
This year, he is heading in person to the Alpine summit with an entourage of U.S. officials against a backdrop of a world in flux, in large part because of his own unconventional actions at home and abroad. Suddenly, an event once dismissed as a talking shop for executives who think they can solve the world's problems has become a must-attend gathering that people are eager to attend.
IMF Sees Stronger Growth, But Sounds Warning On Higher Tariffs And AI Correction
The global economy is set to grow more rapidly than previously expected this year, but could falter if trade barriers rise again and geopolitical conflicts intensify, the International Monetary Fund said Monday.
In its quarterly report on the economic outlook, the Fund also warned that placing the Federal Reserve's independence in question would likely lead to a rise in U.S. inflation and the need for higher interest rates, while a decline in equity prices triggered by concerns about the profitability of new technologies could weaken growth.
China Reports Robust Economic Growth, Thanks to Resilient Exports
A surge in exports powered China's growth last year, defying expectations that a trade war with the U.S. would hobble the world's second-biggest economy.
China's gross domestic product expanded 5% last year when adjusted for deflation, according to data released Monday by the country's National Bureau of Statistics. That met Beijing's official growth target and is in line with the 5% real GDP growth notched in 2024.
Fed Independence Is at Stake in Supreme Court's Cook Hearing This Week. What to Know.
The Supreme Court will hear arguments on Wednesday in a case that could reshape how much control a president has over the Federal Reserve.
The dispute, Trump v. Cook, stems from President Donald Trump's attempt to remove Federal Reserve Governor Lisa Cook for alleged mortgage fraud. Lower courts have blocked the move, and the Trump administration is asking the Supreme Court to allow the firing to proceed, even as Cook's legal challenge continues.
Pentagon Places 1,500 Soldiers on Alert for Possible Minnesota Deployment, Officials Say
About 1,500 active-duty soldiers have been placed on alert for a potential deployment to Minnesota in response to widespread protests over immigration enforcement in the state, according to four defense officials.
The Pentagon has ordered the soldiers from the U.S. Army's 11th Airborne Division to prepare to deploy, meaning they are ready to quickly move to Minnesota if the order is given, three of the officials said. The move is "precautionary" in case the unit is needed, one of the defense officials said.
China's Population Falls for Fourth Straight Year
China's population shrank for a fourth consecutive year, underscoring the demographic challenges facing the world's second-largest economy.
In Trump's Drive for Greenland, NATO Is the First Casualty
BRUSSELS-A few months ago, officials on both sides of the Atlantic hoped that they had saved the Western alliance-the world's biggest economic and military community.
Today, the team that won the Cold War and led the globe is in tatters.
Israel Clashes With U.S. Over Turkey, Qatar Involvement in Gaza Oversight
TEL AVIV-Israel is publicly pushing back against the makeup of a U.S. committee created to oversee Gaza, which includes Israeli rivals like Turkey and Qatar.
Israeli Prime Minister Benjamin Netanyahu said on Saturday that the committee established by the White House to help advance the next phases of the Gaza cease-fire was "not coordinated with Israel and contrary to its policy."
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(END) Dow Jones Newswires
January 19, 2026 04:59 ET (09:59 GMT)
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