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European shares fell sharply on Tuesday, sinking to their lowest levels in nearly two weeks as investor confidence was shaken by renewed trade fears linked to U.S. President Donald Trump’s stance on Greenland.
The pan-European STOXX 600 dropped 1.3% by mid-morning, retreating just days after touching a record high. France’s CAC 40 slid 1.2% to a one-month low, while Germany’s DAX lost 1.4%.
Markets reacted to Trump’s warning that the United States could impose escalating tariffs starting February 1 on eight European countries unless Washington is allowed to acquire Greenland. The threat revived concerns over a new transatlantic trade conflict.
While some investors remain doubtful that Trump will fully act on his warnings, his continued hardline rhetoric has kept markets on edge.
Global policymakers are gathering this week in Davos for the World Economic Forum, where any signals on trade policy and geopolitical risks are expected to shape market direction.
Adding to the uncertainty, the U.S. Supreme Court is due to issue new rulings on Tuesday, including decisions tied to the legality of Trump’s tariff powers.
Earnings and Data Add to Volatility
Corporate news offered only limited support. Renault shares rose after the automaker reported higher sales volumes for 2025, while TotalEnergies edged higher despite forecasting softer oil and LNG sales in the fourth quarter, citing stronger refining margins.
In the United Kingdom, data showed a weakening jobs market ahead of November’s budget, pushing the FTSE 100 down 1.3%.
Luxury stocks were among the worst performers. LVMH fell more than 2% after Trump threatened punitive tariffs on French wines and champagne, adding fresh pressure to the sector.
Overall, the combination of geopolitical tension and policy uncertainty dragged European markets lower, ending early-month optimism and reviving defensive positioning among investors.
