Europe midday: Trump's Greenland tariff threat smashes Stoxx

19th Jan 2026 10:54

(Sharecast News) - European share markets slumped on Monday as the threat of another trade war loomed over US President Donald Trump's threat to annexe Greenland.

The pan-regional Stoxx 600 index was down 1.32% to 606 at midday GMT with all major bourses in the red. Gold and silver both hit record highs as investors sought safe havens from market volatility.

Amid the volatility some brighter economic news emerged as inflation across the eurozone eased more than expected in December, according to figures from Eurostat, with the annual change in the consumer price index slipping below the European Central Bank's 2% target for the first time in seven months.

The CPI rose at a year-on-year rate of 1.9% last month, slowing from the 2.1% rate registered in November and October, Eurostat reported. This was below the 2.0% consensus forecast and the lowest since May 2025.

"European Markets are understandably downbeat in early trade today following the shocking events of the weekend which ramped up concerns over a complete breakdown of the NATO coalition," said Market Scope analyst Joshua Mahony.

"Trump's decision to announced tariffs on a raft of European nations as a means to force through the transfer of Greenland is perhaps one of the most egregious cases of blackmail against an ally in living memory. While many made peace with the unorthodox Venezuela operation given the claims of drug trafficking and population suppression, Trump's attempts to force the transfer of a fellow Nato member's land takes things a step further."

"Trump's hard line on this issue looks to put another nail in the coffin of the US-led Western alliance as we know it, bringing a potential trade war that could escalate into something that serves to damage growth and spark a fresh rise in inflation pressures."

The president on the weekend said he would impose an extra 10% tariff from February 1 on eight allies who opposed his attempt to take-over the semi-autonomous Danish territory. The levy would rise to 25% on June 1 if a deal was not agreed.

European leaders were meeting to prepare a response that could involve €93bn in retaliatory tariffs against the US and also the Anti Coercion Instrument for the first time which would limit American companies from the bloc's market.

The proposed US tariffs would be target against Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland, the authoritarian Trump said in a social media post.

European troops deployed to Greenland for military exercises over the weekend. The possibility of military escalation between allies saw shares in defence stocks rise, with Saab, BAE, Thales, Hensoldt, Renk and Dassault all higher.

Reporting by Frank Prenesti for Sharecast.com