European equities moved lower again on Tuesday, extending the steep losses seen in the previous session as investor unease over potential economic fallout from new trade tariffs continued to weigh on sentiment.
By 03:05 ET (08:05 GMT), Germany’s DAX was down 0.9%, France’s CAC 40 slipped 0.8%, and the U.K.’s FTSE 100 fell 0.8%.
Tariff threats cloud growth outlook
Regional markets sold off sharply on Monday after U.S. President Donald Trump threatened to escalate tariffs on several European allies unless the United States is allowed to purchase Greenland, an autonomous territory of Denmark.
The cautious tone persisted into Tuesday as U.S. markets reopened following a holiday closure on Monday and were expected to face renewed selling pressure. Late on Monday, Trump said he would meet officials to discuss the issue at the World Economic Forum in Switzerland, while reiterating his stance that Greenland is critical for national and global security.
European leaders have largely rejected the proposal and are preparing potential countermeasures should the tariffs move forward. An emergency meeting of EU leaders scheduled for Thursday is expected to address the issue, raising the risk of a wider transatlantic trade dispute. Adding to the pressure, Citigroup downgraded European equities on Tuesday, citing uncertainty around corporate earnings.
Slowing UK wages bolster rate-cut expectations
Fresh data also highlighted a softer outlook for the U.K. economy. Figures released Tuesday showed the unemployment rate remained elevated in November while wage growth slowed, reinforcing expectations of further interest rate cuts by the Bank of England in the months ahead.
According to the Office for National Statistics, the jobless rate held steady at 5.1% in the three months to November—the highest level since early 2021. Average earnings excluding bonuses rose at an annual rate of 4.5%, down slightly from 4.6% previously.
The Bank of England cut its benchmark rate by 25 basis points to 3.75% in December and is set to meet again in early February.
Elsewhere in Europe, German producer prices declined in line with forecasts, falling 2.5% year-on-year in December, data from the federal statistics office showed.
UK pharmaceutical sector draws attention
In corporate news, U.K. drugmaker GSK said it has agreed to acquire RAPT Therapeutics for an estimated equity value of $2.2 billion.
Meanwhile, AstraZeneca announced plans to delist from Nasdaq and complete a direct listing of its shares and debt on the New York Stock Exchange, effective after the market close on January 30.
Oil steadies after volatility
Crude prices traded quietly on Tuesday, consolidating after a volatile prior session driven by Trump’s tariff threats toward major European economies linked to the Greenland dispute.
Brent futures slipped 0.5% to $63.63 a barrel, while U.S. West Texas Intermediate crude fell 0.6% to $58.97.
Beyond geopolitics, attention is turning to the upcoming monthly report from the International Energy Agency, due Wednesday. The report is expected to provide fresh insight into supply conditions, after the agency warned of a potential surplus emerging in 2026.
The IEA update follows a recent outlook from the OPEC, which projected solid demand growth extending into 2026 and 2027.
