Futures tied to the main U.S. equity benchmarks edged lower as investors assessed the risk of new American tariffs targeting several European countries over Greenland. President Donald Trump said discussions on Greenland would take place during his attendance at a major economic forum in Switzerland, while European governments consider how to respond to his demand that the territory come under U.S. ownership. In the U.S., markets are also bracing for a potential Supreme Court decision on the legality of Trump’s tariff measures. Meanwhile, Netflix (NASDAQ:NFLX) is set to release its latest earnings.
Futures point to losses
U.S. stock futures were under pressure on Tuesday, signalling a weak start to a shortened trading week shaped by geopolitical uncertainty.
By 03:07 ET, Dow futures were down 677 points, or 1.4%, S&P 500 futures had fallen 102 points, or 1.5%, and Nasdaq 100 futures were lower by 449 points, or 1.8%.
Wall Street was closed on Monday for Martin Luther King Jr. Day, but global markets have started the week on the back foot. Sentiment has been dented by Trump’s warning that tariffs could be imposed on multiple European nations unless the U.S. is allowed to take control of Greenland. Trump has said the duties would start at 10% and could rise to as much as 25% in June if his demands regarding the semi-autonomous Danish territory are not met.
Analysts at Capital Economics warned that, if enacted and sustained, the tariffs could shave “something between” 0.2% and 0.5% off euro zone GDP, with Germany likely to bear a significant share of the impact.
“In practice though, we doubt that they will be implemented as advertised. We also think the [European Union] will be cautious in any retaliation in an effort to avoid further escalation,” the analysts said.
Trump flags Greenland talks in Davos
Trump said he plans to hold talks on Greenland during his visit this week to the World Economic Forum in Davos, Switzerland.
Posting on social media, Trump said he had a “very good” call with NATO Secretary General Mark Rutte. The president, who is scheduled to address business and political leaders in Davos on Wednesday, added that he would meet with “various parties” during the trip, without naming them.
Reiterating his stance, Trump wrote: “As I expressed to everyone, very plainly, Greenland is imperative for National and World Security. There can be no going back — On that, everyone agrees!”
European governments are reportedly debating their response, including the possibility of imposing steep tariffs on €93 billion worth of U.S. goods. France has also called on the EU to consider deploying an anti-coercion tool that could extend to restrictions on investment or banking activity.
Such measures have been described as a potential EU “bazooka”, raising the risk of a serious rift between Brussels and Washington after a trade agreement was reached last summer. The situation has also revived questions about the future cohesion of NATO.
Supreme Court ruling in focus
Hovering in the background is a long-anticipated Supreme Court ruling on the legality of Trump’s sweeping import tariffs on a range of countries.
Trump has justified the measures under the 1977 International Emergency Economic Powers Act (IEEPA), which grants the president broad authority over international economic transactions during a national emergency. However, justices voiced notable scepticism during hearings late last year, prompting markets to expect a possible ruling against the administration.
Media reports suggest a decision could be issued as soon as Tuesday. Even so, U.S. Trade Representative Jamieson Greer told the New York Times that officials are preparing alternative duties that would “start the next day” should the court strike down the current tariffs.
Gold sets fresh record
Gold prices climbed to new record highs on Tuesday, as uncertainty surrounding U.S. demands over Greenland kept investors cautious and supported demand for safe-haven assets.
Both gold and silver hit all-time highs earlier in the week following Trump’s latest tariff threats. While silver saw some profit-taking on Tuesday, gold remained well supported, helped by a weaker U.S. dollar.
Spot gold rose 1.0% to $4,724.83 an ounce, while gold futures jumped 3.0% to $4,730.50 an ounce by 03:49 ET.
Netflix earnings awaited
On the earnings front, Netflix is due to report its quarterly results after the close of U.S. trading on Tuesday.
Bloomberg consensus estimates point to earnings per share of $0.55 on revenue of $11.96 billion. However, investor attention may focus more on any commentary surrounding Netflix’s interest in Warner Bros. Discovery (NASDAQ:WBD), which has also attracted a competing bid from Paramount Skydance.
The contest for Warner Bros. Discovery is expected to stretch over several months and could face regulatory scrutiny in both the U.S. and Europe. Netflix sees the group’s assets — including HBO Max and franchises such as “Harry Potter” and “Friends” — as a potential growth driver, even as it faces pressure to demonstrate returns from heavy investment in advertising and video games, despite hits like “Stranger Things” and its expansion into live sports.
