European equity markets opened the week under heavy pressure after U.S. President Donald Trump warned that economic sanctions could be imposed on several European countries if they continue to oppose his proposal for the United States to acquire Greenland.
By 08:05 GMT, Germany’s DAX was down 1.3%, France’s CAC 40 had fallen 1.6%, and the UK’s FTSE 100 was lower by 0.4%.
Tariff threats dent risk appetite
Over the weekend, President Trump said the U.S. is prepared to introduce tariffs on exports from eight European countries that have resisted his Greenland initiative. The group includes major economies such as France, Germany and the United Kingdom, alongside several Nordic and northern European nations.
Trump said an initial 10% tariff would be applied from 1 February, rising to 25% in June unless an agreement is reached that would allow the U.S. to gain control of Greenland, the semi-autonomous Danish territory.
In response, the European Union has already suspended ratification of its trade agreement with the United States. Media reports suggest Brussels could revive a €93 billion package of counter-tariffs on U.S. goods, a step that would significantly intensify tensions and raise the risk of a broader transatlantic trade conflict.
“This latest flashpoint has heightened concerns over a potential unravelling of NATO alliances and the disruption of last year’s trade agreements with several European nations, driving risk-off sentiment in stocks and boosting safe-haven demand for gold and silver,” said Tony Sycamore, a market analyst at IG.
The dispute puts additional focus on the World Economic Forum, which gets underway later in the session in Davos, bringing together global political and business leaders, including a sizeable U.S. delegation led by Trump himself.
Eurozone inflation data in focus
The key economic release for Monday is the eurozone’s December inflation report, particularly with U.S. markets closed for Martin Luther King Jr. Day.
Headline eurozone CPI is expected to come in at 2.0% year on year, easing from 2.1% in November and aligning with the European Central Bank’s inflation target for the first time since mid-2025.
The ECB has kept interest rates unchanged since ending its rate-cut cycle in June and signalled last month that it sees little urgency to adjust policy, citing easing inflation pressures and more resilient-than-expected growth toward the end of 2025. The central bank’s next policy meeting is scheduled for early February.
Earlier data showed China’s economic growth slowed to a three-year low in the fourth quarter, with GDP expanding 4.5% year on year, down from 4.8% in the previous quarter.
Corporate and sector moves
The European corporate calendar is relatively quiet, although UK building products group Marshalls (LSE:MSLH) said full-year 2025 adjusted profit before tax was in line with market expectations, despite continued uncertainty in its end markets.
Investor attention is also likely to turn to U.S. technology stocks trading in Europe, as these companies could face retaliatory measures from European authorities should Washington proceed with tariffs linked to the Greenland dispute.
Oil prices ease
Oil prices edged lower, giving back part of last week’s gains as markets assessed the growing risk of a trade war linked to Greenland.
Brent crude futures slipped 0.1% to $59.74 a barrel, while U.S. West Texas Intermediate crude fell 0.1% to $55.95.
Crude prices had climbed earlier last week on concerns that unrest in Iran could disrupt Middle Eastern oil supplies, a region responsible for a significant share of global production. However, much of that risk premium faded after Trump said the U.S. would not intervene militarily in the near term, prompting prices to retreat before stabilising toward the end of the week.
