US Futures Drop as Trump's Greenland Remarks Roil Global Markets
Renewed tariff threats against the EU spook investors, prompting a flight to safe-haven assets and a downgrade of European stocks by a major Wall Street bank.
U.S. stock futures fell sharply in early trading as markets were rattled by renewed geopolitical tensions, after former President Donald Trump reiterated his desire to purchase Greenland and threatened a fresh wave of tariffs against European allies.
The comments triggered a broad risk-off sentiment across global markets, signaling investor anxiety over the potential for escalating transatlantic trade disputes. Futures for the S&P 500 were down 0.8%, while Dow Jones Industrial Average futures pointed to a 0.7% decline at the open. Tech-heavy Nasdaq 100 futures saw the steepest drop, falling approximately 1.1%.
Underscoring the growing concern, strategists at Citi downgraded European equities to “neutral” for the first time in over a year, citing rising transatlantic political tensions and renewed uncertainty over trade. The bank noted the threats created greater downside risks to corporate earnings in the region.
Investors moved into traditional safe-haven assets amid the uncertainty. Gold prices jumped 2% to $4,688 per ounce, with silver surging 4%, as market participants sought to hedge against the unexpected geopolitical friction. Meanwhile, Treasury prices fell as yields ticked higher.
The market reaction follows reports of Trump's plan to impose a 10% tariff on imports from eight European countries—including Denmark, France, and Germany—by February 1. According to regulatory filings, the proposal includes an escalation to 25% by June 1 if a deal for the U.S. to purchase Greenland is not reached.
The renewed threats have drawn a sharp rebuke from international bodies. The International Monetary Fund warned on Monday that such actions risk triggering a “spiral of escalation” that could inflict significant damage on the global economy and destabilize financial markets.
This latest development revives fears of the trade wars that characterized Trump's first term and introduces a new layer of unpredictability for investors already navigating a complex macroeconomic environment. The focus now turns to the response from European leaders and whether the tariff threats will materialize, setting the tone for market sentiment in the weeks to come.