More shine could come off U.S. markets as President Donald Trump threatens the E.U. over Greenland, strategists say.
U.S. stock futures ES00 YM00 NQ00 indicated a selloff could await investors when they return from a holiday on Tuesday. That’s as the Stoxx Europe 600 index XX:SXXP was down 1.2%, led by export-sensitive stocks. Meanwhile, investors piled into gold GC00 and silver SI00.
Shares of German automakers Mercedes-Benz XE:MBG and Volkswagen XE:VOW were both down more than 2%, and Daimler Truck Holding’s XE:DTG stock was declining roughly 3%. French luxury giant LVMH Moët Hennessy Louis Vuitton FR:MC and German sportswear maker adidas XE:ADS were down roughly 4% each.
Defense stocks, however, which have persistently risen since Russia invaded Ukraine in 2022, climbed. Saab shares SE:SAAB.B had risen over 4%. Shares Rheinmetall XE:RHM were 3%, and BAE Systems UK:BA and Thales FR:HO were up over 1% each.
With geopolitical stresses since the start of the year — Greenland headlines added to the U.S. incursion into Venezuela and the continued war in Ukraine — Europe’s defense stocks have attracted investors. Saab shares, for example, are up 36% in January, after a 248% jump in the last 12 months, according to FactSet.
Morgan Stanley analysts told clients Monday that they remain overweight the European defense sector, as the latest tariff threats demonstrate the continent’s need to beef up its security and strategic autonomy. They said fresh tariff potential is “idiosyncratic rather than broad-based,” with just around 2.2% of MSCI Europe revenues directly exposed.
“We see limited tactical downside to EU equities and anticipate continued diversification flows thereafter,” said a team led by Marina Zavolock, chief European equity strategist. Their chart showed how money flowed into Europe last year — a trend that has continued in early 2026.
The euro EURUSD, meanwhile, was trading up 0.4% against the dollar DXY, which fell hard at the start of 2025 and has yet to recover.
Stepping up his campaign for a U.S. takeover of Greenland, Trump posted on social media Saturday that, starting Feb. 1, import tariffs of 10% would be imposed on several European countries. Those tariffs would increase to 25% on June 1 until the U.S. gets its deal.
The E.U. is reportedly considering the revival of a $93 billion package of tariffs on U.S. goods. Other reports indicated that France wanted the activation of the so-called Anti Coercion Instrument (ACI), referred to by some as the “trade bazooka.” That allows for a collective E.U. response to fight economic pressure by a third-party country to influence policies of the E.U. or its member states.
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