- Global stocks fell on Tuesday after President Donald Trump threatened tariffs on Europe over Greenland.
- The Dow Jones, S&P 500 and Nasdaq fell significantly, while the Cboe Volatility Index hit an eight-week high.
- EU leaders will meet to discuss $109 billion in tariffs on U.S. imports at a summit in Brussels.
NEW YORK — 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 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 U.S. 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 $109 billion on U.S. imports, at an emergency summit in Brussels on Thursday.
"The geopolitical risks that we've been talking about for a long time are reemerging 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.
Europe's STOXX 600 fell 0.7% on the day, having already fallen 1.2% on Monday, while the MSCI World Equity Index was down 1.39%. The FTSE 100 fell 0.67%.
Overnight in Asia, MSCI's broadest index of Asia-Pacific shares outside Japan closed lower by 0.63%, while Japan's Nikkei fell 1.11%. Japanese government bonds plunged, sending yields to record highs, after Prime Minister Sanae Takaichi called a snap election, which shook confidence in the country's fiscal health.
"But we have to take all this with a grain of salt because what we've seen in prior times is that we get a risk off and a selloff like this and the Trump administration and the powers that be walk things back and calm things down," Latif added.
Treasury Secretary Scott Bessent told reporters in Davos on Tuesday that he was confident that the U.S. and European countries would find a solution over the Trump administration's aim to take over Greenland, brushing off "hysteria" about a possible trade war.
Tariffs threatened on French wines and champagne
Trump separately threatened to hit French wines and champagne with 200% tariffs, in an apparent effort to cajole French President Emmanuel Macron to join his Board of Peace initiative.
Amelie Derambure, senior multi-asset portfolio manager at Amundi in Paris, said that the downward move in markets was "precautionary profit-taking and some risk reduction," but that markets were helped by the macroeconomic backdrop.
The euro was up 0.67% against the dollar at $1.1723, having earlier hit its highest since Jan. 2. The Japanese yen strengthened 0.02% against the greenback to 158.08 per dollar. The dollar index was down 0.54%, at 98.55, heading for its second day of declines.
Treasury yields hit their highest since September in early trading. Markets were closed on Monday for a public holiday, so the moves were a delayed reaction to the developments that began over the weekend.
The yield on benchmark 10-year notes rose 5.4 basis points to 4.285%. The yield curves between two-year and 10-year Treasuries, and between 10-year and 30-year Treasuries, steepened by the most since October.
The yield on the benchmark German 10-year Bunds fell 0.5 basis points to 2.856%.
Oil prices edged higher, with Brent crude futures up 1.2% at $64.71 a barrel and West Texas Intermediate settled up 1.51% at $60.34 a barrel.
Gold hit a record high, rising above $4,700 an ounce. It was last up 2% to $4,763.28 an ounce.
Spot silver slipped 0.20% to $94.53 an ounce, after hitting a record $95.87 earlier.
