Precise Investors Editorial Team
MSCI’s broadest index of Asia-Pacific shares outside Japan slid 0.1%
Stock markets slipped in Asia on Monday after U.S. President Donald Trump threatened to impose extra tariffs on eight European nations until the U.S. was allowed to buy Greenland, pushing the dollar down against the safe-haven yen and Swiss franc.
Gold and silver both climbed to all-time highs, while oil flatlined on concerns about what a possible trade war between the U.S. and Europe could mean for global growth and demand.
A holiday in U.S. equity and bond markets made for thin trading and probably contributed to a 0.8% decline in S&P 500 futures, and a 1.1% drop in Nasdaq futures.
For Europe, EUROSTOXX 50 futures and DAX futures both slipped 1.1%, while FTSE futures shed 0.4%. Nikkei dropped 0.8%, and MSCI’s broadest index of Asia-Pacific shares outside Japan slid 0.1%.
Trump said he would impose additional 10% import levies from February 1 on goods from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland and Britain, rising to 25% on June 1 if no deal was reached.
Major European Union states condemned the tariff threats over Greenland as blackmail, and France proposed responding with a range of previously untested economic countermeasures.
The EU’s options include a package of its own tariffs on 93 billion euros ($108 billion) of U.S. imports that was suspended for six months in early August, and measures under an Anti-Coercion Instrument that could hit U.S. services trade or investments.
Analysts at Deutsche Bank noted European countries owned $8 trillion of U.S. bonds and equities, almost twice as much as the rest of the world combined, and might consider bringing some of that money back home.
With the U.S. net international investment position at record negative extremes, the mutual interdependence of European-U.S. financial markets has never been higher, said George Saravelos, Deutsche’s global head of FX research.
It is a weaponisation of capital rather than trade flows that would by far be the most disruptive to markets, he added.
It should also make for a fraught few days at Davos as leaders from around the world gather in Switzerland at the World Economic Forum.
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