Markets slide as Trump threats over Greenland push dollar lower, gold and silver hit records
U.S. futures fell and the dollar weakened after President Trump threatened tariffs on eight European countries over Greenland. Gold and silver reached record highs as investors sought safety.
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By Torontoer Staff
U.S. stock futures dropped on Monday after President Donald Trump said he would impose extra tariffs on eight European countries until the United States is allowed to buy Greenland. The announcement pushed the dollar lower and sent investors toward safe-haven assets, with gold and silver both reaching all-time highs.
Trading was thin because of a U.S. market holiday, but equity futures still reflected the risk-off mood: S&P 500 futures fell 0.7% and Nasdaq futures lost 1.0%. European and Asian contracts moved lower as authorities in Europe denounced the tariff threats.
What the tariff threat said and how markets reacted
Trump said he would impose an additional 10% import levy from February 1 on goods from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland and Britain, rising to 25% on June 1 if no deal is reached. Major European states called the threats blackmail. France proposed a set of countermeasures.
European futures were down about 1.1% for both EUROSTOXX 50 and the DAX. Japan’s Nikkei fell 1.0%, and MSCI’s broad index of Asia-Pacific shares outside Japan dipped 0.1%.
Capital flows and the risk of financial retaliation
The European Union could respond with a mix of tariffs and measures under an Anti-Coercion Instrument, possibly targeting U.S. services or investment. Analysts at Deutsche Bank highlighted how much European investors own in U.S. assets, saying the potential for capital moves could be more disruptive than shifts in trade flows.
With the U.S. net international investment position at record negative extremes, the mutual interdependence of European-U.S. financial markets has never been higher. It is a weaponization of capital rather than trade flows that would by far be the most disruptive to markets.
George Saravelos, Deutsche Bank global head of FX research
Currencies and safe-haven moves
The dollar weakened against safe havens after the announcements. The euro recovered from an early dip to $1.1613, and sterling rose to $1.3387. The dollar eased 0.2% against the Swiss franc to 0.7995 francs, and it fell 0.3% against the yen to 157.70.
Markets are watching central bank calendars for further direction. China is expected to report quarterly growth of 4.4% year-on-year to December, and the Bank of Japan meets on Friday. While no rate hike is widely expected from the BOJ this week, policymakers could flag tightening later in the year.
Commodities: gold, silver and oil
Precious metals rose as investors sought protection from geopolitical and trade risk. Gold and silver climbed to record levels, with gold gaining about 1.5%. The move reflected demand for assets seen as stores of value when policy or political risk rises.
Oil prices eased amid concerns that a broader U.S.-Europe trade conflict could slow global growth. Brent fell 0.5% to $63.84 a barrel, while U.S. crude declined 0.4% to $59.18 per barrel. There were also lingering concerns about a possible U.S. strike on Iran as a U.S. Navy aircraft carrier group was expected in the Persian Gulf.
Market backdrop and what to watch next
Thin liquidity from the U.S. holiday likely amplified the moves, but investors will be watching several scheduled events that could change the picture. Delayed U.S. data on core inflation and consumption for November are due on Thursday and will influence expectations for when the Federal Reserve might adjust policy.
Earnings season continues to add volatility. Companies reporting this week include Netflix, Johnson & Johnson, General Electric and Intel, alongside bank results. Global political gatherings will also matter: the World Economic Forum in Davos will include a large U.S. delegation led by the president, which may heighten tensions or produce diplomatic signals.
- Tariff threat: 10% from Feb. 1, rising to 25% from June 1 if no deal.
- Countries targeted: Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland, Britain.
- Key data: China GDP due Monday, U.S. core inflation and consumption due Thursday.
- Notable reports: Bank of Japan meeting Friday, ongoing corporate earnings.
Investors are increasingly focused on the interplay of politics and markets. The immediate impact was a move into safer assets and a weaker dollar, but the longer-term effects will depend on whether rhetoric turns into sustained policy action and how European authorities respond.
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