World markets face fresh jolt as Trump vows – Money News
By Karin Strohecker and Dhara Ranasinghe
LONDON, Jan 18 (Reuters) – Global markets face a fresh bout of volatility this week after President Donald Trump vowed to slap tariffs on eight European nations till the U.S. is allowed to buy Greenland.
Trump stated he would impose an extra 10% import tariffs from February 1 on items from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland and Britain, which is able to rise to 25% on June 1 if no deal is reached.
The eight European states issued a joint assertion backing Greenland on Sunday, whereas Ireland’s prime minister stated the European Union will retaliate if U.S. tariff threats in opposition to Europe materialise.
“Hopes that the tariff situation has calmed down for this year have been dashed for now – and we find ourselves in the same situation as last spring,” stated Berenberg chief economist Holger Schmieding.
Sweeping “Liberation Day” tariffs in April 2025 despatched shockwaves by markets. Investors then largely regarded previous Trump commerce threats within the second half of the 12 months, viewing them as noise and responding with aid as Trump made offers with Britain, the EU and others.
While that lull may be over, market strikes on Monday might be dampened by the expertise that investor sentiment had been more resilient and world financial growth stayed on monitor.
Nonetheless, Schmieding anticipated the euro might come below some strain when Asian commerce begins. The euro ended Friday at round $1.16 in opposition to the greenback, having hit its lowest ranges since late November.
Implications for the greenback had been much less clear. It stays a protected haven, however might additionally really feel the influence of Washington being on the centre of geopolitical ruptures, as it did final April.
“For European markets it will be a small setback, but not something comparable to the Liberation Day reaction,” Schmieding stated.
European shares are trading close to document highs, with Germany’s DAX and London’s FTSE index up more than 3% this month, outperforming the S&P 500, which is up 1.3%.
European protection shares are more likely to benefit from geopolitical tensions. Defense shares have jumped virtually 15% this month, as the U.S. seizure of Venezuela’s Nicolas Maduro fueled considerations about Greenland.
Denmark’s carefully managed crown may also possible be in focus. It has weakened, however price differentials are a main issue and it stays close to the central price at which it’s pegged to the euro and isn’t removed from six-year lows.
“The U.S.-EU trade war is back on,” stated Tina Fordham, geopolitical strategist and founder of Fordham Global Foresight.
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