Stocks hit with across board selloff as Trump's threats over Greenland unnerves investors

The S&P 500 fell 1.97% and the Nasdaq Composite fell 2.19%

Global stocks were lower across the board on Tuesday, with a selloff in equities on Wall Street, Europe and Asia, amid increased market volatility after US President Donald Trump threatened to reignite a trade war with Europe over Greenland.

Trump said he no longer thought "purely of peace" after he did not win the Nobel Peace Prize and reiterated a threat to increase tariffs on EU members Denmark, Finland, France, Germany, Sweden, and the Netherlands, along with Britain and Norway, until the US is allowed to buy Greenland.

The threats reignited the "Sell America" trade that emerged after Trump's "Liberation Day" levies announced last April.

EU leaders will discuss options, including tariffs worth €93bn on US imports, at an emergency summit in Brussels on Thursday.

"The geopolitical risks that we've been talking about for a long time are re-emerging and are shifting market perceptions of common alliances across allies in Europe," said Wasif Latif, chief investment officer at Sarmaya Partners in New Jersey.

"That is coupled with what's going on in Japan with the JGB yields continuing to rise and the market caught asleep at the wheel on that risk that's out there. So it's all coming together for a pretty significant risk off day."

The Dow Jones Industrial Average fell 1.75%, the S&P 500 fell 1.97% and the Nasdaq Composite fell 2.19%. Wall Street's most-watched gauge of investor anxiety, the Cboe Volatility Index, jumped to an eight-week high of 20.75.

In Europe, shares touched their lowest in nearly two weeks. The pan-European STOXX 600 ended 0.7% lower, marking its biggest two-day drop in two months. France's CAC 40 index dropped 0.6% to touch a one-month low, while Germany's DAX slipped 1%. In Dublin, the ISEQ All Share index was down 0.9%.

"So markets have reacted but there's clearly room for bigger moves if the rhetoric increases further. Trump will likely continue to be active beforehand but remember he speaks at Davos today and this would be an ideal location for him to get his full views of the world across," said a group of analysts at Deutsche Bank led by Jim Reid.

Top policymakers from around the world have gathered in Davos, Switzerland this week for the WEF's annual meeting, which will be closely watched for signals on economic policy and the geopolitical outlook.

Corporate earnings and data are also expected to steer market sentiment in Europe this week.

French automaker Renault Group's shares rose 2.2% after it said sales volumes rose 3.2% in 2025. Oil major TotalEnergies was up 1.4%, as the company said it expects lower oil and liquefied natural gas sales in the fourth quarter of 2025, but stronger margins on refining fuels.

Sectors on the STOXX 600 were broadly in decline, led by real estate's 1.9% fall, pressured by the steepening of euro zone bond yields. Luxury group LVMH shares fell 2.2%. Trump threatened to slap a 200% tariff on French wines and champagne to push French President Emmanuel Macron to join his Board of Peace initiative.

Against this backdrop, Citi downgraded continental Europe to "neutral" for the first time in over a year, saying the latest step-up in transatlantic tensions and tariff uncertainty dented the near-term investment case for European equities.