LONDON â European stocks opened sharply lower on Monday as traders reacted to U.S. President Donald Trump's threat to hike tariffs on European countries if they oppose his bid to buy Greenland.
The pan-European Stoxx 600 had fallen about 0.8% shortly just before 8:30 a.m. in London (3:30 a.m. ET), with every sector in negative territory.
The morning market slump comes after Trump announced on Saturday that eight European allies would face increasing tariffs, starting at 10% on Feb. 1 and rising to 25% on June 1, if a deal is not reached that allows Washington to "buy" Greenland, a semi-autonomous territory that's part of Denmark.
Eight NATO members' goods sent to the U.S. will face escalating tariffs "until such time as a Deal is reached for the Complete and Total purchase of Greenland," Trump stated on his social media platform Truth Social on Saturday.
The proposed tariffs would target Denmark, Norway, Sweden, France, Germany, the U.K., the Netherlands, and Finland, Trump said. European leaders said the tariffs were "unacceptable" and vowed to stand behind Denmark.
European carmakers and the luxury goods sector were hit hard in early trade as investors reacted to the tariff proposals.
The Stoxx Europe 600 Automobiles & Parts Index was 2.2% lower in early dealmaking. Volkswagen slumped about 3.3%, while Porsche fell 3.7% and BMW lost 6.6%.
Among the continent's luxury names, meanwhile, LVMH dropped 3.6%, Kering slipped 2.9%, Hermes tumbled 3.3% and Moncler was 1.8% lower. Overall, the Stoxx Europe Luxury 10 was last seen down 2.9%.
In contrast, Europe's defense stocks rallied. Rheinmetall, the continent's largest defense company, was up 1.4%, as German counterpart Renk advanced almost 3.6%, with French tech and aerospace giant Thales adding 2.6%.
Elsewhere, ASM International was up 1.8% after the Dutch computer chipmaker reported stronger-than-anticipated preliminary bookings of around 800 million euros ($930 million) for the fourth quarter, boosted by a rebound in Chinese orders and above forecasts of 669 million euros. Preliminary revenues, meanwhile, came in at 698 million euros, outweighing LSEG poll estimates.
Shares in ASML, meanwhile, dropped 2.8% in early trade Monday. The slide comes after the Dutch semiconductor equipment maker hit a record high last week.
Markets will also be keeping a close eye on the World Economic Forum kicking off in Davos, Switzerland, this week. Trump is due to address the Forum on Wednesday.
There are no major earnings this week, though on the data front, euro zone inflation data is due.