The stock market took a nosedive, and bonds were selling off fast as investors braced for a backlash after Donald Trump threatened to take over Greenland.
It was a brutal morning to mark the one-year anniversary of Trump’s return to office amid escalating trade-war fears.
The Dow plummeted more than 700 points before recovering slightly. The S&P 500 dropped 1.4 percent at the opening bell while the Nasdaq fell 1.8 percent.
Global investors are shifting away from the U.S. after Trump made another round of threats against Europe over the holiday weekend.
U.S. bond prices tumbled, sending yields soaring as Trump’s trade threats weighed on the U.S. debt. The U.S. Dollar Index fell nearly one percent.
The sell-off came after Trump threatened to impose 10 percent tariffs on imports from eight European countries starting February 1st unless a deal is reached for the U.S. to buy Greenland. The countries included close allies Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland.
The president warned in his post that if an agreement is not reached, the tariffs on the countries would go up to 25 percent on all goods exported to the U.S. starting in June.
Trump claimed Monday night that European countries would not push back against the U.S. taking over Greenland, but European leaders were quick to respond to his threats and signaled they were preparing for possible retaliatory measures this week.
The president continued to rage post against European allies late Monday about Greenland ahead of his trip to Davos this week for the World Economic Forum.
Trump on Monday also threatened to impose 200 percent tariffs on French wine and champagne if President Emmanuel Macron doesn’t join his proposed “Board of Peace.”
European foreign ministers equated the president’s tariff threats over the weekend to blackmail.
On Tuesday, Treasury yields hit their highest level in four months. The yield for the benchmark 10-year Treasury was trading four basis points higher. Yields for the 20- and 30-year Treasuries jumped six basis points.
Treasuries dropped further after a Danish pension fund, AkademikerPension, said on Tuesday it would sell off its holdings of U.S. government debt amid concerns over the president’s ongoing threats to invade Greenland, Denmark’s semi-autonomous territory.
It indicated, however, in a statement, that the decision to divest some $100 million in U.S. Treasuries was not in response to the rift between the U.S. and Europe but rather to “poor” U.S. government finances.
