MW Stock futures lead global markets sharply lower and gold hits fresh record as Trump threatens tariffs on Europe over Greenland
By Jamie Chisholm
Concerns European nations will retaliate raises fears of more trade turmoil
US President Donald Trump has sparked another round of trade tension
U.S. stock futures led global equities sharply lower early Monday, while gold hit a new record high, after U.S. President Donald Trump's new tariff threats against European states over Greenland sparked a wave of risk aversion.
"U.S. President Trump's actions over the weekend have inflamed geopolitical risks while also reintroducing trade uncertainty," said Kyle Rodda, senior financial market analyst at Capital.com.
E-mini S&P 500 futures (ES00) fell 0.9%, Hong Kong's Hang Seng index HK:HSI lost 1% and the STOXX Europe 600 index XX:SXXP was down 1.3% shortly after the open. U.S. cash markets are closed Monday for Martin Luther King, Jr Day.
Traders moved into perceived havens, with gold futures (GC00) rising above $4,670 an ounce for the first time and silver (SI00) reaching a new record above $94 an ounce. Ten-year German government bond yields BX:TMBMKDE-10Y, the European benchmark, fell about 2 basis points. Yields move inversely to bond prices.
Trump on Saturday said he would slap 10% tariffs on imports from eight European countries beginning Feb. 1, as he ramps up a pressure campaign on Denmark to sell Greenland to the U.S.
Those tariff rates, on Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands and Finland, will increase to 25% on June 1 "until such time as a Deal is reached for the Complete and Total purchase of Greenland.," Trump wrote in a message on Truth Social.
European nations were reported to be preparing a number of responses to Trump's latest salvo, including a EUR93 billion worth of tariffs on U.S. imports or restricting American companies' access to the continent's markets.
Investors fear such a move will exacerbate tensions between two of the world's biggest trading partners. In 2024, the U.S. imported goods worth approximately $350 billion from the eight countries that Trump is now threatening with new tariffs, and a 10% additional levy on those goods could ultimately raise U.S. consumer prices by up to 0.15%, according to Holger Schmieding, chief economist at Berenberg.
"However, Trump's threat puts the entire U.S.-EU tariff agreement at risk. In the unlikely case that the agreement will not be implemented, the damage to U.S. consumers could then be almost three times as bad in the end," said Schmieding.
One way for Europe to retaliate, according to Ipek Ozkardeskaya, senior analyst at Swissquote, is to utilize its so-called Anti-Coercion Instrument, a legal framework that allows the European Union to respond collectively when a third country uses economic pressure to influence EU or member-state policies.
"Concretely, this could result in retaliatory tariffs - against U.S. Big Tech companies, for example - but also investment restrictions. That may explain why tech-heavy Nasdaq futures (NQ00) are under heavier downside pressure this morning than Dow Jones futures," said Ozkardeskaya.
Michael Brown, senior research strategist at Pepperstone, said that given the fresh trade and geopolitical uncertainty it was not surprising traders were taking a cautious stance early Monday.
"Unsurprisingly, while that headline noise does pan out, some participants may seek to take profits on their long risk positions, or seek downside protection through options, though all this should further bolster what was already an incredibly solid bull case for precious metals, like gold and silver, where the 'path of least resistance' continues to lead clearly higher," said Michael Brown, senior research strategist at Pepperstone.
However, some observers said they spied a familiar pattern in markets, where initial concerns about Trump's tariff plans swiftly fade on expectations they are merely a bargaining ploy that may be rescinded.
"This should be seen as the beginning of a now-familiar 'escalate to de-escalate' cycle that ultimately culminates in some sort of 'deal' - with Trump himself deciding how much policy uncertainty and collateral damage there is along the way," said a team of strategists at Evercore ISI led by Sarah Bianchi.
Trump is due to meet European leaders at the World Economic Forum in Davos this week. Meanwhile, markets are also waiting for the U.S. Supreme Court to present its judgement on the legality of Trump's use of the International Emergency Economic Powers Act of 1977 to justify his many country-specific tariffs.
Still, the prospect of a longer-term rift between the U.S. and Europe is helping the continent's defense stocks buck the broader trend, with shares of Germany's Rheinmetall (XE:RHM), the U.K.'s BAE Systems (UK:BA) and France's Thales (FR:HO), all higher.
-Jamie Chisholm
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(END) Dow Jones Newswires
January 19, 2026 03:33 ET (08:33 GMT)
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