VIX Soars As Trump's Renewed Tariff Threats Against NATO Members Spook Markets: Dow Futures Decline 700 Points, Nasdaq 100 Futures Fall 2% Pre-Market

• President Trump to impose a 200% tariff on French wine and champagne, in response to the likelihood of French President Emmanuel Macron not joining the “Board of Peace.”
• Trump also said that Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland will be subject to 10% tariffs, which will increase to 25% from June 1.
• Analysts at ING Think stated that both the U.S. and the EU can inflict “significant” damage on each other beyond tariff policy.

President Donald Trump’s renewed tariff threats against North Atlantic Treaty Organization (NATO) allies have spooked investors, with the CBOE Volatility Index (VIX) soaring nearly 34% to over 20 ahead of the opening bell on Tuesday.

Futures of the Dow Jones Industrial Average (DJIA) were down more than 700 points at the time of writing, the S&P 500 futures fell 1.6%, and the Nasdaq 100 futures declined nearly 2%.

President Trump has threatened to slap tariffs on goods imported into the U.S. from several European countries over their opposition to his Greenland ambitions. He also threatened to impose a 200% tariff on French wine and champagne. “I'll put a 200% tariff on his wines and champagnes and he'll join, but he doesn't have to join,” he said in response to a reporter’s comment that French President Emmanuel Macron may not join the Trump administration’s “Board of Peace,” according to a Euronews report.

At the time of writing, VIX was hovering at 20.14, the highest level since November last year.

What Is The Board Of Peace?

The “Board of Peace” refers to an idea floated by President Trump last year in line with his peace plan for Gaza. According to a Reuters report, a draft charter has been sent to 60 countries, requiring them to contribute $1 billion to remain on the board beyond 3 years.

Key among those invited are Russia, China, India, and other U.S. allies like Canada, France, and Saudi Arabia, among others.

Trump’s Greenland Threats

In a post on Truth Social on Saturday, President Trump stated that the U.S. has subsidized Denmark and other European Union countries by not imposing tariffs or other forms of remuneration. He added that it is now time for Denmark to “give back” to the United States.

He said that, from February 1, Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland will be subject to 10% tariffs, which will increase to 25% from June 1.

“This Tariff will be due and payable until such time as a Deal is reached for the Complete and Total purchase of Greenland,” said President Trump.

Analyst Take

Analysts at ING Think stated that both the U.S. and the EU can inflict “significant” damage on each other beyond tariff policy.

“Depending on how Davos discussions develop, we will then know whether EU leaders need to play hardball when they meet on Thursday, whether US tariffs on Europe go into effect on 1 February and whether Europe retaliates with a €93bn package of tariffs on 6-7 February,” the firm stated in a recent note.

Deutsche Bank’s Jim Reid reportedly thinks that the full impact of Trump’s tariff threats is yet to fully show up in financial markets.

“With the US off yesterday the implications of the tariff threats over Greenland had yet to fully percolate through financial markets. Markets have reacted but there’s clearly room for bigger moves if the rhetoric increases further,” he said in a recent note, according to a CNBC report.

Japanese Bond Yields Surge

Japanese government bond yields surged on Tuesday after Prime Minister Sanae Takaichi called snap elections on February 8.

Meanwhile, the Japanese 10-Year Treasury yield was up seven basis points to 2.344%, while the 30-Year yield was up 27 basis points to 3.877%.

“The sell-off at the long-end of the JGB market is sending ripples through bond markets around the globe,” ING Think analysts said.

U.S. equities declined in Tuesday’s pre-market trade. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was down by 1.52%, the Invesco QQQ Trust ETF (QQQ) fell 1.82%, while the SPDR Dow Jones Industrial Average ETF Trust (DIA) fell 1.34%. Retail sentiment around the S&P 500 ETF on Stocktwits was in the ‘bearish’ territory.

Also See: ATON Stock Is Soaring Pre-Market – It All Ties Back To Telegram And AI Privacy

For updates and corrections, email newsroom[at]stocktwits[dot]com.

Share

·

Add us on