European Markets Slide Amid Trump’s Greenland Tariff Threat: Autos and Luxury Stocks Hit Hard

European markets tumbled on Monday as investors reacted to U.S. President Donald Trump’s controversial threat to impose tariffs on several European countries if they resist his plan to acquire Greenland. The pan-European Stoxx 600 index fell 1.4% by mid-morning in London, with nearly all sectors in negative territory except telecoms, which rose 0.5%. Key national indexes, including France’s CAC 40, Germany’s DAX, Italy’s FTSE MIB, and the U.K.’s FTSE 100, all registered significant declines.

Trump announced over the weekend that eight European allies would face escalating tariffs on goods sent to the U.S., starting at 10% on February 1 and potentially reaching 25% by June 1, unless a deal is reached to allow Washington to “buy” Greenland. The tariffs would affect Denmark, Norway, Sweden, France, Germany, the U.K., the Netherlands, and Finland. European leaders quickly rejected the proposal as “unacceptable,” pledging to stand with Denmark.

The European automotive and luxury sectors bore the brunt of the sell-off. The Stoxx Europe 600 Automobiles & Parts Index dropped 2.8%, with Volkswagen down 2.6%, Porsche 3.9%, and BMW 4.2%. Luxury stocks also fell sharply: LVMH fell more than 4%, Hermes tumbled 3.2%, and Kering slipped 2.9%, reflecting investor concerns over potential trade restrictions hitting high-end exports.

In contrast, defense stocks gained ground amid the turmoil. Rheinmetall, Germany’s leading defense company, rose 2.8%, with Renk up 2.5% and French aerospace giant Thales adding 2.3%. Meanwhile, Dutch chipmaker ASM International fell 0.7%, despite stronger-than-expected preliminary bookings for the fourth quarter. ASML, another Dutch semiconductor equipment maker, saw its shares drop 3.3% after hitting a record high last week.

Investors also sought safe-haven assets, pushing gold prices to a 52-week high. U.S. gold futures surged 1.6% to $4,670.40 per ounce, while spot gold climbed 1.5%. Markets are now turning attention to the World Economic Forum in Davos, Switzerland, where Trump is scheduled to speak on Wednesday, and upcoming eurozone inflation data. Analysts say the next few weeks could be volatile as trade tensions with Europe continue to unfold.

source: cnbc