Markets slide as Donald Trump renews threats over Greenland takeover

Global financial markets fell sharply after Donald Trump intensified his campaign to bring Greenland under US control, unsettling investors and fuelling fears of a deepening rift between Washington and its European allies.

Wall Street suffered its worst session in months after the US president threatened Denmark and several other European countries with heavy tariffs unless an agreement was reached over the Arctic territory. Al Jazeera reported that Trump has repeatedly argued that Greenland is critical to US security interests, citing growing Chinese and Russian activity in the region.

The S&P 500 dropped more than 2 per cent on Tuesday, its steepest fall since October. Technology shares were hit hardest, with the Nasdaq Composite sliding around 2.4 per cent, while the Dow Jones Industrial Average fell close to 1.8 per cent.

The US dollar, which often benefits during periods of market stress, also weakened, slipping about 0.8 per cent against a basket of major currencies. Investors instead sought refuge in gold, which climbed nearly 2 per cent to trade above $4,700 an ounce, a record high.

European markets followed Wall Street lower. London’s FTSE 100 ended the day around 0.7 per cent down, while Germany’s DAX fell by more than 1 per cent. The sell-off extended into Asia on Wednesday, with Japan’s Nikkei 225 and South Korea’s Kospi initially dropping more than 1 per cent before recovering some ground.

Trump’s remarks have pushed US-European relations to what analysts describe as their most strained point in decades, raising concerns about the future of Nato and the stability of transatlantic trade. He has refused to rule out the use of military force to secure Greenland, despite both the United States and Denmark being members of the alliance.

Denmark has repeatedly insisted that Greenland, a self-governing territory within the Danish realm, is not for sale. Danish officials have warned that any attempt to seize the island by force would undermine Nato’s core principle of collective defence.

In response to the escalating rhetoric, the European Union is due to hold an emergency meeting on Thursday to consider its options. These include the possible use of the bloc’s anti-coercion mechanism, which would allow Brussels to impose wide-ranging restrictions on US companies, including technology firms, operating in the EU.

Asked at the White House how far he was prepared to go to secure control of Greenland, Trump offered no specifics, telling reporters: “You’ll find out.” He later said he was confident a deal could be reached and that the situation would “work out pretty well”.

European Commission president Ursula von der Leyen sought to strike a firm but conciliatory tone at the World Economic Forum in Davos, where Trump is expected to meet Nato leaders. She said Europe was willing to work with Washington to strengthen security in the Arctic but would not compromise on sovereignty.

“We consider the people of the United States not just our allies, but our friends,” von der Leyen said. “But plunging us into a dangerous downward spiral would only help those who wish to weaken us both. Our response will be united, firm and proportionate.”

For investors, the episode has highlighted how quickly geopolitical tensions can spill over into markets, with Trump’s latest intervention underscoring the growing link between foreign policy brinkmanship and global financial volatility.