Stock markets have fallen on both sides of the Atlantic as Donald Trump stepped up his rhetoric in the push for US control of Greenland.
The sell-off hit US stocks on Tuesday, the first day of trading on Wall Street since Trump threatened new tariffs on eight European countries, after the market was closed for a public holiday on Monday. The S&P 500 was down 1.2% while the Dow Jones was down 1%.
The tech-heavy Nasdaq index fell 1.3%, and big tech names such as Amazon, Tesla and the chip designer Nvidia all fell between 2% and 3% after Wall Street opened, wiping billions of dollars off their market values.
The UK’s FTSE 100 index dropped 0.8% on Tuesday, accelerating from a smaller fall on Monday and putting it on track for its biggest single-day drop since November.
In Europe, France’s CAC was down 0.7%, Germany’s DAX fell 1% and Italy’s FTSE MIB was off 1.1%.
The dollar was down 0.9% against a basket of currencies.
Trump’s latest threat to increase tariffs on US imports of goods from Germany, France, Denmark, the UK, Sweden, the Netherlands, Norway and Finland have renewed economic uncertainty.
The UK’s chancellor, Rachel Reeves, on Tuesday urged people to keep cool heads as fears mount over Trump’s push for Greenland.
“We absolutely want to de-escalate,” she told Bloomberg at the World Economic Forum (WEF) in Davos. “The future of Greenland is for the people of Greenland.”
Trump is scheduled to give a speech at the WEF on Wednesday.
Earlier on Tuesday, the US treasury secretary, Scott Bessent, also speaking at Davos, urged European countries not to retaliate against the US’s trade tariffs announced over the Greenland crisis.
Referring to Trump’s “liberation day” tariffs, announced in April, Bessent said: “I would say this is the same kind of hysteria that we heard on 2 April. There was a panic.
“What I am urging everyone here to do is sit back, take a deep breath, and let things play out. The worst thing countries can do is escalate against the United States.”
But Kathleen Brooks, a research director at the broker XTB, said Bessent had failed to calm investor nerves.
“Overall, this is a manmade crisis, and the continued sell off on Tuesday suggests that US threats to Greenland and their effects on financial markets could have further to go if the situation does not deescalate soon,” she said.
Gold and silver hit record highs as investors sought shelter from the market falls. Gold rose past $4,700 (£3,496) an ounce for the first time on Tuesday, and silver hit a fresh high of $95.52 an ounce.
Trump wrote in a social media post on Saturday that eight European countries including the UK, France and Germany, will face tariffs “until such time as a Deal is reached for the Complete and Total purchase of Greenland”. The tariffs are due to start at 10% on 1 February, rising to 25% on 1 June.
US cruise operators are among the worst hit in the market falls, and shares in Carnival Corp, Royal Caribbean and Norwegian Cruise Line Holdings were down by 2.4%, 3.2% and 5.3% respectively.
Trump also added further uncertainty to global trade overnight by threatening to impose 200% tariffs on French wines and champagne after France’s Emmanuel Macron was reported to be unwilling to join his “board of peace” on Gaza.
The comments sent shares in owners of French drinks brands falling. The luxury group LVMH – which owns Dom Pérignon, Moët & Chandon and Veuve Clicquot – dropped 2.4%, and the Telmont champagne owner Rémy Cointreau fell by as much as 1.5%, before recovering slightly to a fall of 0.5%.
