Catenaa, Monday, January 19, 2026- European stocks fell from a near-record high, while credit risk gauges rose after Trump reignited the trade war between the US and Europe, threatening fresh tariffs over Greenland.
The Stoxx Europe 600 Index fell over 1.3%, with sectors most exposed to the US market, including automakers and luxury stocks, taking heavy losses.
The defense sector surged in response to heightened geopolitical tension. US equity futures also fell, while the cash market was closed for a public holiday.
Gauges of European credit risk rose, crimping what was already likely to be a quieter start to the week for debt sales, given the US holiday.
The iTraxx Crossover index of junk-rated credit default swaps, a key gauge of risk sentiment, rose as much as 8.5 basis points, according to data compiled by Bloomberg. A similar gauge for high—grade firms rose as much as 1.8 basis points.
Trump on Saturday announced a 10% tariff as of February 1 on goods from European countries that have rallied to support Greenland in the face of US threats to seize the territory.
He said the levies would increase to 25% in June unless and until a deal is reached for the “Complete and Total purchase of Greenland.” Germany’s finance chief said Trump has reached a red line and urged Europe to prepare its strongest trade countermeasure in response.
Trump’s announcement drew a swift rebuke from European leaders, with the European Union reportedly in talks to potentially impose tariffs on $108 billion of US goods, if Trump follows through on the threat of a 10% levy.
The most immediate and tangible reaction from the EU was that it would halt approval of its July trade deal with the US.
