19/01/2026 Daily Reports
- The 10% Ultimatum: President Trump announced a 10% tariff starting February 1 on goods from eight European countries (Denmark, France, Germany, UK, Netherlands, Finland, Sweden, and Norway) for opposing the US purchase of Greenland. He warned these would hike to 25% in June unless a deal for the “Total Purchase” is reached.
- Stock Futures Slump: Risk sentiment soured as the week began. Euro Stoxx 50 futures tumbled over 1%, while S&P 500 futures dropped 0.8%. With US cash markets closed for a holiday today, the volatility is primarily concentrated in European and Asian sessions.
- Europe’s “Bazooka” Response: French President Emmanuel Macron has moved to activate the EU’s Anti-Coercion Instrument (ACI)—the bloc’s most powerful retaliatory tool. This “bazooka” allows the EU to counter-strike not just with tariffs on goods, but by targeting US services, investments, and intellectual property.
- Safe-Haven Flight: The “Sell America” trade has returned. The US Dollar weakened as traders rushed into Gold (reaching $4,660/oz), the Swiss Franc (CHF), and the Japanese Yen (JPY). Government bonds are also seeing a bid as investors seek shelter from the potential “weaponization of capital.”
- Trade Deal in Limbo: EU lawmakers are poised to halt the ratification of last year’s hard-fought trade deal with the US. This reversal threatens to undo the relative stability markets enjoyed in late 2025.
What’s Next?
- We have entered a “dangerous downward spiral” where geopolitics are no longer just influencing trade, but actively dismantling it. By linking a 25% tariff to the purchase of a sovereign territory (Greenland), the Trump administration has introduced a level of unpredictability that markets find impossible to model.
- Following Donald Trump’s threat over the weekend to impose high tariffs on eight European countries, including Germany, France, and the UK, unless they negotiate the sale of Greenland, global financial markets entered a period of intense volatility.
- This extraordinary escalation in trade policy triggered a decisive shift toward “risk aversion.” European indices led the decline, with the DAX losing 1.3% as automotive manufacturers and luxury brands felt the pressure most acutely.
- In Asia, the Nikkei lost approximately 0.7% to 1% as it came under further pressure from China’s lower-than-expected GDP data and regional trade concerns. This threat revived demand for safe-haven assets.
- This reflects investors’ deep concerns about a potential “escalation spiral” between the US and NATO allies. As the IMF warned that such a retaliatory trade war could significantly damage 2026 global growth forecasts, the shift towards safe-haven assets accelerated.
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U.S. stock futures fell on Monday after President Trump threatened to impose an additional 10% tariff on imports from eight European countries for opposing U.S. control over Greenland.
The targeted countries — Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands and Finland — strongly criticized the move, warning that it undermines transatlantic relations and risks escalating tensions. Their joint statement marked the strongest response from European allies since Trump returned to the White House nearly a year ago.
Stephen Innes of SPI Asset Management said Trump’s actions are testing the strategic alignment and trust between the United States and Europe, America’s largest trading partner and a key source of financing.
“In a world where geopolitical cohesion within the Western alliance can no longer be taken for granted, the automatic recycling of capital into U.S. assets becomes less certain,” Innes said. “This is not a short-term sell-off, but a gradual rebalancing and that has far more significant long-term consequences.”
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Global markets moved into a moderate risk-off mode as renewed U.S. tariff threats spilled beyond trade and into questions of sovereignty, raising uncertainty around existing and pending trade agreements. Equity futures in the U.S. and Europe retreated, while safe havens such as gold, silver, the Swiss franc and the yen pushed higher. The dollar softened broadly, even against the euro, as investors focused on the scale of European ownership of U.S. assets and the potential fallout from escalating trade frictions. The backdrop adds tension ahead of the World Economic Forum in Davos, where political and economic leaders are set to confront growing policy uncertainty.
Elsewhere, China benefited from the shifting landscape, securing a new trade agreement with Canada and posting slightly stronger-than-expected GDP growth, though weak domestic consumption and demographic pressures remain a concern. In Japan, political uncertainty also came into focus as speculation grew around a potential snap election and possible tax cuts, developments that could influence fiscal policy and market sentiment. With geopolitics, trade policy and domestic politics all in play simultaneously, investors remain cautious, bracing for heightened volatility across global assets in the days ahead.
