Tensions Escalate Between the U.S. and Europe: Stocks Fall, Gold Rises
Media reports suggest the European Union could revive a €93 billion tariff package on U.S. goods in retaliation.
Quick overview
- European stocks fell up to 1.6% due to escalating trade tensions between the U.S. and the EU.
- President Trump announced new tariffs on several European countries, raising concerns of a broader trade dispute.
- Precious metals, including gold and silver, reached record highs as investors sought safe-haven assets.
- The U.S. dollar weakened by 0.2%, while oil prices remained relatively stable.
European stocks slide as trade tensions between the United States and the European Union intensify, while precious metals hit record highs and oil and the dollar weaken.
With Wall Street closed for the Martin Luther King Jr. Day holiday, European equities are trading lower on Monday, January 19, with losses of up to 1.6%, amid rising trade and geopolitical tensions.
The Euro Stoxx 50 fell 1.5%, led by Paris (-1.7%) and Milan (-1.2%), as increased risk aversion weighed on investor sentiment.
Market caution intensified after Donald Trump warned of potential new tariffs on countries opposing his plan to move forward with the acquisition of Greenland, a statement that reignited concerns across global markets.
Over the weekend, Trump said the United States would impose an additional 10% tariff starting February 1 on goods from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland, and the United Kingdom.
He added that tariffs could rise to 25% in June if no agreement is reached allowing the U.S. to gain control of Greenland, a semi-autonomous territory within the Kingdom of Denmark.
European Retaliation to Trump
Media reports suggest the European Union could revive a €93 billion tariff package on U.S. goods in retaliation, a move that would significantly escalate tensions and raise the risk of a broader transatlantic trade dispute.
In Asia, markets were mixed. Japan’s Nikkei fell 0.7% on profit-taking and U.S. tariff threats, South Korea’s Kospi rose 1.3%, Shanghai’s benchmark index gained 0.29%, while Hong Kong’s Hang Seng was down 1.06% ahead of the close.
Following Trump’s tariff threats linked to potential U.S. moves on Greenland, affected European countries began to respond. EU officials are reportedly considering invalidating the trade agreement reached with Washington last July and have also warned about the possible activation of the bloc’s anti-coercion instrument, a mechanism designed to counter economic pressure from third countries.
Precious Metals Hit Record Highs
Amid rising geopolitical tensions, precious metals continue to strengthen as safe-haven assets. Both gold and silver reached record highs. Spot gold climbed 1.6% on Monday to $4,669.57.
Brent crude, the European benchmark, traded nearly flat at $64.11 per barrel, while U.S. benchmark West Texas Intermediate (WTI) stood at $59.34.
The U.S. dollar also weakened on Monday, slipping 0.2% to 99.050.
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