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Stocks fell sharply while bond markets collapsed amid ongoing tensions and increased talk about the future. Greenland.
The FTSE 100 index closed down 68.57 points, or 0.7%, at 10,126.78 points on Tuesday.
The FTSE 250 index closed down 153.94 points, or 0.7%, at 22,957.87 points. Purpose The stock closed down 2.35 points, or 0.3%, at 801.14 points.
US President’s Tariff Threat Donald Trump European markets continued to come under pressure, while a sea of red flooded Wall Street screens as trading resumed after a public holiday on Monday.
In European stock markets on Tuesday, the Paris CAC 40 index closed down 0.6%, and the Frankfurt DAX 40 index closed down 1.0%.
Financial markets were lower in New York as stocks closed in London.
The Dow Jones Industrial Average fell 1.3%, the S&P 500 fell 1.4% and the Nasdaq Composite fell 1.5%.
Trump said over the weekend that starting from February 1, the United Kingdom, Denmark, Finland, France, Germany, the Netherlands, Norway and Sweden would impose a 10% tariff on all goods shipped to the United States until Denmark agrees to cede Greenland.
The announcement prompted angry accusations from U.S. allies who are considering countermeasures.
“Trade concerns are now front and center, with European leaders pushing back on Washington’s stance and reportedly discussing countermeasures,” said David Morrison, senior market analyst at Trade Nation.
“The potential use of the EU’s anti-coercion tools adds to market jitters, particularly for export-intensive sectors such as automobiles and luxury goods, which are already under pressure.”
Morrison noted clear divisions over how Europe should respond to Trump’s threats.
“While British Prime Minister Starmer pursues a moderate approach and insists that gritting the teeth is better than war, French President (Emmanuel) Macron Favors a more aggressive approach and wants to counter European tariffs against U.S. tariffs,” he said.
European Commission President Ursula von der Leyen warned that Trump risked sending U.S.-EU relations into a “downward spiral.”
Macron warned of US attempts to “bring Europe to submission” and blasted Trump’s threat to impose tariffs of up to 25% on countries that oppose his plans for Greenland as “unacceptable”.
There are reports that Europe may consider imposing retaliatory tariffs and may also adopt a coordinated strategy to sell U.S. Treasuries.
The U.S. 10-year Treasury bond yield was at 4.28%, an increase from 4.21% last Friday.
The U.S. 30-year Treasury bond yield was at 4.91%, up from 4.82% on Friday.
The focus now turns to Davos, where Trump is scheduled to speak on Wednesday.
“An escalation or softening of tone appears likely to set the direction for European risk assets over the coming days,” Morrison said.
Sharp sell-off in bond market adds to bond market anxiety Japan.
Kathleen Brooks of XTB Research said that while the sell-off in long-term bond yields was global, the biggest move “by far” was in Japan.
She noted that Japan’s 30-year bond yield rose 26 basis points as investors “worried about expansionary fiscal policy if Prime Minister Sanae Takaichi wins the Feb. 8 election.”
Ms Brooks said: “Greenland is grabbing the headlines now, but in the longer term the crazy rise in Japanese bond yields is likely to have a much larger global impact.”
She added: “Japan is at the heart of global capital flows, and if there is disruption in Japan’s financial markets, it could have a knock-on effect on global capital flows and overall risk sentiment.”
Ms. Brooks said the risk was that the bond sell-off would cause “something to break down and either Japanese banks or funds to get into trouble like Silicon Valley Bank in 2023, which is why the Japanese bond market and this week’s Trump show are worth watching.”
At the close of trading in London on Tuesday, the pound was quoted at $1.3462, up from $1.3428 on Monday.
The euro was trading higher against $1.1733 and higher against $1.1643.
The dollar was trading at 157.95 yen, down from 158.11 yen.
In London, analysts weighed data on a cooling labor market and slower average wage growth.
The unemployment rate in the three months to November was 5.1%, unchanged from the three months to October, according to the National Bureau of Statistics.
This is slightly higher than the market consensus cited by FXStreet, which expects the unemployment rate to fall slightly to 5.0%.
The Office for National Statistics said that the number of salaried employees in the UK fell by 155,000, or 0.5%, year-on-year in November, and by 33,000, or 0.1%, month-on-month.
Regular earnings, excluding bonuses, grew at an annual rate of 4.5% in the three months to November, a slowdown from 4.6% in the three months to October.
Average annual regular revenue growth was 7.9% for the public sector and 3.6% for the private sector.
Barclays analysts said: “Today’s labor market data showed some easing of wage pressures, soft employment and rising layoffs. We believe this is consistent with our view that the labor market continues to slow and will slow further in the coming months.”
Informa led blue-chip gains, rising 4.6% after reporting “strong trading” in the fourth quarter.
The London-based events, digital services and academic publishing business expects revenue of at least £4 billion in 2025, up 13% from £3.55 billion in 2024, with underlying revenue up 6.3%.
In the FTSE 250, weak labor statistics sent PageGroup down 3.8% and Hays down 0.3%.
Morgan Stanley reiterated its “underweight” stance on both recruitment companies and lowered its stock price targets.
On the other hand, Funding Circle shares rose 14% after the company reported stronger-than-expected revenue and profit growth in 2025 and achieved its 2026 financial revenue target a year ahead of schedule.
The London-based SME-focused lending platform said revenue for the year would be around £204 million, up 28% year-on-year and beating market expectations of £191 million.
Pre-tax profits in 2024 increased from £3 million to approximately £20 million, also higher than market expectations of £17 million.
Wise Group shares rose 15% as analysts raised their profit forecasts amid strong third-quarter trading.
The London-based remittance services provider expects full-year underlying revenue to be around the middle of its 15% to 20% growth guidance range, and expects underlying pre-tax margins for the 2026 financials to be “near the top” of its 13% to 16% guidance range.
JP Morgan analyst Craig McDowell said the underlying revenue forecast was 16.3% better than market expectations, while the underlying pre-tax profit margin forecast was 14.3% better than market expectations.
McDowell expects financial pre-tax profits to rise 9% to 12% in 2026, while Bank of America is more optimistic, raising the figure by 20%.
Brent crude oil rose to $64.89 a barrel on Tuesday, down from $64.13 late Monday night.
Gold was quoted at $4,742.56 an ounce on Tuesday, up from $4,671.76 on Monday.
The biggest gainers on the FTSE 100 were Informa, up 39.8p to 912.2p; Haleon, up 11.8p to 372.9p; Endeavor Mining, up 112.0p to 4,208.0p; and Rentokil Initial, up 8.0p to 461.7 PENNY; Melrose Industries Inc. rose 9.0 pence to 4,208 pence. 625.8p.
The biggest fallers on the FTSE 100 were Mondi, down 41.2p to 845.4p; Beazley, down 44.0p to 1,126.0p; Pershing Square Holdings, down 134.0p to 4,442.0p; and Land Securities, down 19.0p to 635.0. Pence; Bunzl, down 57.0p to 1,126.0p. 1,989.0p.
Wednesday’s global economic calendar features UK inflation data and Canadian producer price inflation data.
Wednesday’s UK corporate calendar features trading reports from luxury goods maker Burberry, sports retailer JD Sports, electronics retailer Currys and pub chain JD Wetherspoon.
– Alliance News Feed