Stock markets across Europe have experienced significant declines as tensions rise surrounding U.S. ambitions for Greenland. The UK’s FTSE 100 index recorded a fall of 1% on Tuesday, continuing a downward trend that began the previous day, and is now on track for its most considerable single-day drop since November. Other European indices reflected similar struggles, with France’s Cac 40 down 1.1%, Germany’s Dax decreasing by 1.5%, and Italy’s FTSE MIB also falling by 1.5%.
In a surprising move, the U.S. dollar, which typically serves as a safe-haven asset, fell by nearly 1% against a range of other leading currencies. Although U.S. markets were closed on Monday in observance of Martin Luther King Jr. Day, early trading indicators suggested that American stocks would face a notable decline when they opened, with futures hinting at a 1.4% drop.
As market participants shifted their focus amid uncertainty, prices for gold and silver surged to record highs. Gold exceeded $4,700 (£3,496) per ounce for the first time ever on Tuesday, while silver reached $95.52 an ounce, marking a fresh peak.
The turmoil can be traced back to remarks made by President Donald Trump, who, in a social media post, indicated that eight European countries—including the UK, France, and Germany—would be subjected to tariffs until a deal for the “complete and total purchase of Greenland” is finalized. The proposed tariffs, beginning at 10% on February 1 and potentially escalating to 25% by June 1, have raised alarms among market watchers.
In related comments, Trump cited Britain’s recent decision to cede the Chagos Islands to Mauritius as one of the motivations behind his interest in Greenland. The cruise industry could be hit particularly hard by these developments, with shares of major operators such as Carnival Corp, Royal Caribbean, and Norwegian Cruise Line Holdings all dipping around 3% in pre-market trading. The fashion sector is not escaping unscathed either; companies like Under Armour, Ralph Lauren, and Abercrombie & Fitch all saw their stock prices tumble due to anticipated increased tariffs impacting retail costs.
Further amplifying global trade uncertainty, Trump threatened to impose a staggering 200% tariff on French wines and champagne after comments from French President Emmanuel Macron regarding a proposed “board of peace” for Gaza. This threat sent shares of major French beverage companies plummeting—luxury brand LVMH, known for Dom Pérignon and Moët & Chandon, dropped 2.4%, while Rémy Cointreau, the parent company of Telmont champagne, fell 1.5%.
Investment director Russ Mould from AJ Bell remarked that while the current volatility is relatively mild in the grand scheme of market fluctuations, the stakes were notably high as global leaders prepare to meet at the World Economic Forum in Davos. As the markets brace for Wall Street’s opening, concerns about potential retaliatory actions from Europe against U.S. tech giants add another layer of complexity. The heightened tensions have fueled significant investment in precious metals, with gold traders now eyeing the $5,000 per ounce mark after recent gains.
