Global stock markets experienced a selloff this morning as world leaders attending the Davos forum learned that the rationale behind repeated threats to acquire Greenland was linked to not receiving the Nobel Peace Prize.
“Given that your Country chose not to award me the Nobel Peace Prize … I no longer feel bound to focus solely on Peace, though it will always be a priority, and can instead consider what is beneficial and appropriate for the United States of America,” the statement continued. “Global security is unattainable without our Complete and Total Control of Greenland.”
The Norwegian government does not influence the Nobel Committee’s prize decisions. Greenland is a Danish territory, not a part of Norway.
In a late-night post, it was stated, “For two decades, NATO has warned Denmark to ‘remove the Russian threat from Greenland.’ Denmark has, regrettably, failed to act. The time has now come, and it will be accomplished!!!”
Alarmed by the potential for a renewed U.S.-Europe trade conflict, traders responded by pushing equity prices lower worldwide.
S&P 500 futures dropped 1.12% in morning trading—a notably sharp decline. The previous session ended unchanged. (U.S. markets are closed for Martin Luther King Jr. Day.) The STOXX Europe 600 index fell 1.25% in early trade, while the U.K.’s FTSE 100 declined 0.49% by midday. Japan’s Nikkei 225 decreased by 0.65%. China’s CSI 300 held steady. India’s NIFTY 50 was down 0.42%. Bitcoin fell to $93,000. South Korea’s KOSPI was the sole major national index to advance, rising 1.32%.
The traditional safe-haven asset, gold, reached a new record peak of $4,673.4 on the Comex continuous contract.
Analysts on Wall Street largely concur that President Trump’s persistent threats to compel Denmark to relinquish Greenland and to impose progressively higher trade tariffs on the U.K. and E.U. in case of non-compliance are detrimental to global equities. Their opinions vary only on the severity of the potential impact.
ING economists Carsten Brzeski and Bert Colijn advised clients, “In summary, we reiterate our prior projections that extra 25% tariffs could likely reduce European GDP growth by 0.2 percentage points. Nonetheless, this model-derived estimate undoubtedly fails to account for the comprehensive effect of fresh uncertainty and geopolitical strains arising from heightened tensions.”
They also warned, “As in previous instances, the outcome remains unclear since there has been no official White House communication, only Trump’s social media announcement.”
The analysts further cautioned that Trump might be misjudging European resolve. “Although Europe appears initially resolved to oppose the latest tariff threat and the U.S. President’s Greenland claims, the fact remains that Europe still relies on the U.S. economically and for security. This dependency was probably a key factor in the E.U.’s agreement last summer to a U.S. trade deal that offered Europe little advantage. It is uncertain whether the new tariff threat and the Greenland issue will become the catalyst for European unity and its emergence as a geopolitical force. What is evident is that a full-scale E.U.-U.S. trade war would have no winners.”
In a morning note, UBS’s Paul Donovan alerted that proposed tariffs could negatively affect American consumers. “The latest U.S. tariff threats seem more consequential than those connected to Iran … they suggest prices for U.S. consumers on goods from the E.U. and U.K. could rise between 4% and 10% within approximately six months. This could exacerbate concerns regarding the U.S. affordability crisis.”
“Policy uncertainty has reemerged for U.S. companies. This has previously limited investment and hiring, and though it may have diminished as businesses adjusted, uncertainty of this magnitude could once again halt U.S. corporate activity.”
Another consideration is whether Trump possesses sufficient domestic political support to pursue his ambition regarding Greenland.
“A Reuters/Ipsos poll conducted last week indicated that merely 17% of U.S. citizens favor attempts to obtain Greenland, with 47% opposed. Just 4% endorsed the use of military force, with agreement from only 8% of Republican voters,” Jim Reid and his team at Deutsche Bank informed clients this morning.
Here’s a snapshot of the markets ahead of the opening bell in New York this morning:
- S&P 500 futures were down 1.12% this morning. The last session closed flat. Markets in the U.S. are closed for MLK Day.
- STOXX Europe 600 was down 1.25% in early trading.
- The U.K.’s FTSE 100 was down 0.49% in early trading.
- Japan’s Nikkei 225 was down 0.65%.
- China’s CSI 300 was flat.
- The South Korea KOSPI was up 1.32%.
- India’s NIFTY 50 was down 0.42%.
- Bitcoin was down to $93K.