European shares moved lower again on Tuesday, deepening the sell-off seen in the previous session as investors remained uneasy about the potential economic fallout from new trade tariffs.
By 08:05 GMT, Germany’s DAX was down 0.9%, France’s CAC 40 slipped 0.8% and the UK’s FTSE 100 fell 0.8%.
Tariff concerns cloud growth outlook
Regional markets slid sharply on Monday after US President Donald Trump threatened to escalate tariffs against several European allies unless the United States is allowed to buy Greenland, the autonomous territory of Denmark.
That cautious mood looked set to persist on Tuesday as US markets reopened after a public holiday and were expected to come under renewed pressure. Trump said late on Monday that he would meet a number of officials at the World Economic Forum in Davos, Switzerland, to discuss the issue, while restating his stance on Greenland, saying that “Greenland is imperative for National and World Security. There can be no going back.”
European leaders have broadly dismissed Trump’s demands and are reportedly preparing countermeasures should tariffs be imposed. An emergency meeting of EU leaders is scheduled for Thursday, raising the risk of a wider transatlantic trade dispute.
Adding to the cautious tone, Citigroup on Tuesday downgraded European equities, citing heightened uncertainty around the earnings outlook.
Slower UK wage growth fuels rate-cut expectations
UK economic data released Tuesday pointed to easing inflationary pressure. The unemployment rate remained elevated in November, while wage growth cooled, reinforcing expectations that the Bank of England could continue cutting interest rates this year.
The jobless rate held at 5.1% in the three months to November, unchanged from the previous period and the highest level since early 2021. Meanwhile, average earnings excluding bonuses rose 4.5% year on year, down slightly from 4.6% previously.
The Bank of England lowered its key rate by 25 basis points to 3.75% in December and is next due to meet in early February.
In Germany, producer prices declined largely in line with forecasts in December, falling 2.5% year on year, according to data from the federal statistics office.
UK pharma names in focus
On the corporate front, UK pharmaceutical companies drew attention. GSK (LSE:GSK) said it had agreed to acquire RAPT Therapeutics (NASDAQ:RAPT), a California-based clinical-stage biopharmaceutical firm, in a deal valuing the target’s equity at about $2.2 billion.
Separately, AstraZeneca (LSE:AZN) announced plans to delist from Nasdaq and move to a direct listing of its ordinary shares and debt on the New York Stock Exchange, effective after the close of trading on January 30.
Oil steadies after volatile trade
Oil prices were relatively subdued on Tuesday, consolidating after sharp swings in the previous session triggered by Trump’s renewed tariff threats toward Europe.
Brent crude futures slipped 0.5% to $63.63 a barrel, while US West Texas Intermediate fell 0.6% to $58.97.
Beyond geopolitical tensions, attention is turning to supply dynamics, with a closely watched monthly report from the International Energy Agency due on Wednesday. The IEA has repeatedly warned of a potential supply surplus emerging in 2026.
The report follows last week’s outlook from the Organization of the Petroleum Exporting Countries, which struck a more optimistic tone on oil demand for 2026 and 2027.
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