Global stock markets experienced significant declines as tensions escalated following Donald Trump’s renewed threats to acquire Greenland.
The FTSE 100 Index plunged over 120 points, shedding 1.3 per cent to reach 10068.4 shortly after opening on Tuesday, compounding a 0.4 per cent decline from Monday.
Across Europe, major indices also registered substantial losses, with Germany’s Dax down 1 per cent and France’s Cac 40 off 0.9 per cent in early trading, mirroring sharp overnight declines in Asia.
The controversy began on Saturday when Mr Trump threatened to impose tariffs of up to 25 per cent on nations, including the UK, that do not back his Greenland acquisition plans.
Mr Trump, who is en route to Davos, Switzerland, for the World Economic Forum, intensified his rhetoric concerning the acquisition of the Arctic territory.
Through a series of posts on his Truth Social platform overnight on Tuesday, he further articulated his desire to take over Greenland, a territory belonging to America’s Nato ally, Denmark.
US financial markets were closed on Monday for Martin Luther King Jr Day, but futures trading pointed to steep falls when equity trading reopens on Tuesday.
Gold prices soared to another new record as investors sought out the safe haven asset, hitting $4,728 (£3,507) per ounce during morning trading on Tuesday.
Kathleen Brooks, a research director at XTB, said: “What happens next for financial markets will ultimately depend on President Trump’s actions in the coming days.
“The president posted a picture of himself holding a US flag on Greenland, suggesting that the territory will be owned by the US this year.
“However, he also said that he will hold a Greenland meeting at Davos, after a good conversation with the Nato secretary general and former Dutch PM Mark Rutte.
“For now, Trump is sticking to his guns and said that there is ‘no going back’ on his Greenland pledge.
“Thus, the meeting in Davos later this week will be critical.”
Yields on UK Government bonds, also known as gilts, edged higher amid a wider sell-off as Japan’s government bonds plunged, triggered by news of a snap election to be held on 8 February.
The pound continued to rise against a weak US dollar, up 0.4 per cent at $1.348, but was 0.3 per cent lower at €1.15.
