Global markets took a hit on Tuesday as investors remained concerned over the fallout from President Donald Trump’s push for US control of Greenland. The sell-off was seen on both sides of the Atlantic, with Wall Street joining the downturn on the first trading day since Trump threatened new tariffs on eight European countries.
The S&P 500 index fell 1.5%, while the Dow Jones Industrial Average dropped 1.3%. The tech-heavy Nasdaq index saw a 1.8% decline, with major players like Amazon, Tesla and Nvidia shedding over 3% of their market value. Across the pond, the UK’s FTSE 100 index dipped 0.7%, France’s CAC 40 lost 0.6%, Germany’s DAX fell 1%, and Italy’s FTSE MIB was down 1.1%.
The dollar also weakened, declining 0.9% against a basket of currencies, as Trump’s threat to increase tariffs on US imports from Germany, France, Denmark, the UK, Sweden, the Netherlands, Norway and Finland reignited economic uncertainty.
However, Trump’s commerce secretary, Howard Lutnick, sought to downplay the likelihood of a fresh trade war, suggesting that the president uses tariffs as a “way to initiate diplomacy.” Speaking at the World Economic Forum in Davos, Lutnick argued that the outcome of the “kerfuffle” over Greenland was likely to be diplomacy rather than action.
Alongside Lutnick, UK Chancellor Rachel Reeves urged caution, saying the US should remember its allies and that “the future of Greenland is for the people of Greenland.” She called for a de-escalation of the situation, echoing the sentiment of US Treasury Secretary Scott Benson, who urged European countries not to retaliate against the US trade tariffs.
Despite these calls for calm, the continued sell-off on Tuesday suggested that the market’s concerns over the Greenland crisis and its impact on global trade could persist if the situation does not de-escalate soon. The safe-haven assets of gold and silver hit record highs as investors sought shelter from the market turmoil.
