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Equity Alert: US indices end sharply lower on US-Europe tensions

 

MUMBAI--0737 IST--Major equity indices in the US ended around 2% lower each on Tuesday, after a holiday on Monday. This was after US President Donald Trump threatened tariffs on European countries until they reach an agreement that will let the US acquire Greenland. The US president also threatened French wine and champagne companies with a 200% tariff. 

 

Trump on Saturday said US imports from eight North Atlantic Treaty Organization members would face tariffs starting at 10% on Feb. 1 and rising to 25% on Jun. 1 unless and until a deal was reached for the world's largest economy to acquire the Arctic island. Trump also threatened 200% import tariffs on French wines and champagnes at a time when reports suggest that French President Emmanuel Macron is not interested in joining the US leader's 'Board of Peace' on Gaza. Trump also lashed out at the UK, calling its plan to hand over sovereignty of the Chagos Islands to Mauritius as a "great act of stupidity" and also said that this was another reason why Greenland had to be acquired. The islands are one of the sites of a UK-US military base, CNBC reported. The fear gauge of Wall Street, Cboe Volatility Index, spiked to a high of 20.99.

 

The threat of tariffs have reignited the 'Sell America' trade, which emerged following the US president's "Liberation Day" levies announced last April, Reuters reported. European leaders are set to discuss possible responses such as tariffs worth on around $109 billion on US imports at an emergency meeting in Brussels Thursday. "The geopolitical risks that we've been talking about for a long time are re-emerging and ‌are shifting market perceptions of common alliances across allies in Europe," Wasif Latif, chief investment officer at Sarmaya Partners in New Jersey, was reported as saying. "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," Latif added. 

 

Oil prices ended higher for the session, rising 1.5% to end at $64.92 per barell. US West Texas Intermediate settled higher at $60.34 per barrel, up 1.5% as well, Reuters reported. Gold hit a record high of $4,700 an ounce, while spot silver prices slipped slightly after reaching a record high of $4,700 an ounce. 

 

Trump is set to speak at the World Economic Forum in Davos on Wednesday and has agreed to talk to European leaders to discuss his ambitions over the mineral rich island. Speaking on the president's proposed takeover, US Treasury Secretary Scott Bessent defended Trump, saying, "That will stop any kind of a kinetic war, so why not pre-empt the problem before it starts?" CNBC reported. 

 

Following are the closing levels of US indices Tuesday:  

 

Index	Level	Change in %
S&P 500	6796.86	(-)2.06
NASDAQ Composite	22954.32	(-)2.39
Dow Jones Industrial Average	48488.59	(-)1.76

 

(Akshat Saksena)

 

US$1 = INR 90.98

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Avishek Dutta

 

All prices from National Stock Exchange, unless otherwise specified.

All percentage changes for share prices are rounded off to the nearest whole number; percentage changes for index values are rounded off to one decimal place.

All times are Indian Standard Time.

 

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