Global equities sold off on Monday while gold surged to fresh all-time highs, as investors reacted to renewed trade tensions sparked by President Donald Trump's latest tariff threats against Europe.
European stocks bore the brunt of the risk-off move. The Euro STOXX 50, which tracks the 50 largest companies in the euro area, slid 1.3%. Losses were widespread across the region, with Germany's DAX down around 1% and France's CAC 40 down 1.5%. The UK's FTSE 100 edged 0.5% lower.
Large-cap European stocks led the declines, weighing heavily on benchmark indices.
French luxury giant LVMH (OTC:LVMHF) dropped nearly 4%, while semiconductor equipment leader ASML Holding N.V. (NASDAQ:ASML) slid 3.6%. German software heavyweight SAP SE (NYSE:SAP) fell 2.4%.
Luxury peer Hermès International (OTC:HESAF) and healthcare bellwether and Danish healthcare bellwether Novo Nordisk A/S (NYSE:NV) also posted robust losses.
U.S. equity index futures were also sharply lower during European trading hours, though cash trading on Wall Street will close for the Martin Luther King Jr. Day holiday.
Precious metals rallied aggressively as investors rotated into traditional safe-haven assets.
Gold prices – as tracked by the SPDR Gold Shares (NYSE:GLD) jumped 1.6% to a new record near $4,670 per ounce, extending an already historic rally. Silver outperformed, surging more than 3% to around $93, reflecting both defensive demand and continued momentum across the metals complex.
"Gold's explosive surge and the sharp fall in global equities send a blunt message from markets: investors now believe President Trump could act on taking Greenland," said Nigel Green, CEO of deVere Group.
Trump Escalates Greenland Tariff Threats
Market turbulence followed comments over the weekend when Donald Trump reiterated plans to impose new tariffs on European countries opposing U.S. ambitions tied to Greenland.
The proposal calls for 10% tariffs starting Feb. 1, rising to 25% by June unless the United States gains control of Greenland. Investors had largely discounted the issue in recent weeks.
European leaders pushed back quickly. Emmanuel Macron urged the European Union to prepare retaliatory steps, including revived tariffs and the bloc's anti-coercion tool. EU officials warned retaliation could target up to €93 billion in U.S. exports.
The issue is unfolding as global leaders gather at the World Economic Forum in Davos. "Unusually, President Trump will be attending as head of a large U.S. contingent including many tech CEOs," said David Morrison, senior market analyst at Trade Nation. "This sets the stage for potential fireworks, with the ownership of Greenland suddenly becoming such a contentious issue."
Are Markets Pricing A Real Greenland Shock?
Prediction markets are increasingly factoring in the Greenland risk.
Traders on Polymarket are currently assign a 39% probability that some Greenland-related tariffs will take effect by February 1, with country-specific odds ranging from 36% for Denmark and 35% for Norway to 25% for Germany.
Longer-term forecasts imply a 25% chance that the U.S. acquires part of Greenland in 2026, while the probability of a military invasion remains relatively low at 11%.
