Trump threatens Europe with more tariffs over Greenland

General market commentary

Equity markets closed modestly lower on Friday, as gains in real estate and industrial equities were offset by weakness in the health care sector. Bond yields rose, with the 10 year Treasury yield reaching 4.23 percent, while the U.S. dollar strengthened against major currencies. Elsewhere, Asian markets finished higher following a Taiwan U.S. trade agreement reducing tariffs on Taiwanese imports, whereas European markets fell amid President Trump’s proposal of new tariffs on nations opposing U.S. control of Greenland. Commodities saw WTI oil trade higher amid ongoing geopolitical volatility, although prices remain close to five year lows, providing a tailwind for consumers.

So far this year, equity markets have shown remarkable resilience despite a flurry of headline risks, including geopolitical tensions, domestic policy proposals, and scrutiny of Federal Reserve leadership. Corporate earnings have been robust, with major banks reporting stronger than expected results and broader S&P 500 earnings projected to rise around 8 percent year over year for the fourth quarter, supported by technology. Economic fundamentals remain supportive, underpinned by moderating inflation, steady GDP growth, resilient consumer spending, and broadening corporate profits. Market leadership has rotated towards cyclical and procyclical sectors, suggesting a healthy bull market dynamic, with opportunities in mid caps, industrials, consumer discretionary, and international equities, even as investors navigate headline driven volatility.

Latest market and economic update

Most Asian equities fell on Monday as renewed U.S. tariff threats over Greenland hit risk sentiment, though Chinese markets were supported by stronger-than-expected GDP data. Japan’s key indexes and Hong Kong’s Hang Seng declined, while South Korea’s market outperformed on chip gains. Broader regional losses mirrored weaker Wall Street futures ahead of a busy week.

US equity futures fell overnight after Trump threatened new tariffs on eight European countries over Greenland. Dow futures dropped 0.6%, S&P 500 futures 0.7%, and Nasdaq 100 futures 1%, as European retaliation loomed. Investors also eyed a busy earnings week, including Netflix, Visa and Intel, while US markets remained closed for a holiday.

European shares ended a subdued week with the STOXX 600 flat on Friday, weighed down by falls in luxury and mining equities after a busy earnings start and easing geopolitical jitters. The index still notched its fifth straight weekly gain, supported by defence and healthcare strength, while investors digested mixed results and ongoing uncertainty.

The dollar index eased towards 99 after reaching multi-week highs, weakening as trade tensions intensified. It initially gained against the euro but then reversed sharply. The euro strengthened to around 1.1629 as investors became cautious about the impact of Trump’s tariff threats on the US economy, market confidence and global trade prospects.

Oil prices were steady in Asian trade, with Brent at $64.10 a barrel, after last week’s swings over Iran supply concerns eased. Focus shifted to Trump’s threatened tariffs on eight European nations over Greenland, raising trade tensions. Analysts also noted upcoming Davos discussions and potential US interest rate cuts could influence demand.

European capitals are preparing up to €93 billion in tariffs or restrictions on American companies in response to President Trump’s Greenland purchase proposal, opposed by NATO allies. Trump also announced 10% import tariffs from February 1 on goods from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland and Britain, rising to 25% on June 1 if no deal is reached.

China’s Q4 2025 GDP grew 1.2% quarter-on-quarter and 4.5% year-on-year, meeting Beijing’s 5% annual target. Stimulus and strong exports supported growth, though analysts warn actual growth may be 3–3.5% and 2026 could be weaker. Retail sales and investment lagged, while manufacturing remained robust amid ongoing U.S. trade tariffs.

China’s population fell by 3.39 million in 2025 to 1.405 billion, marking a fourth annual decline. Births sank to a decades-low 7.92 million, while deaths rose to 11.31 million. Rapid ageing, with 23% over 60, is pushing Beijing towards costly pro-birth policies as leaders seek to reverse decades of population control and stabilise long-term growth.

Equities on the move

The following companies experienced moves in their share price driven by analyst ratings, quarterly earnings, or other news:

Elon Musk announced Tesla will restart development of its third-generation Dojo supercomputer, following the AI5 chip’s completion. Dojo3 aims to advance AI and self-driving software, likely using Tesla’s in-house chips. The move follows the shutdown of Dojo2, with Tesla collaborating with TSMC and Samsung while continuing to use Nvidia’s data centre chips.

The U.S. Supreme Court will hear Bayer’s appeal to limit Roundup cancer lawsuits, potentially reducing billions in damages. The case involves a $1.25 million verdict for a man with non-Hodgkin’s lymphoma. Bayer argues federal law preempts state claims, while plaintiffs cite marketing failures. The company has already paid $10 billion in past settlements.

Samsung expects strong memory chip demand to outpace supply through 2026. DRAM output will rise 5%, while demand grows 30%, keeping supply tight and driving prices up 5-60% in Q1, with conventional DRAM for PCs and smartphones up around 40%. NAND flash shortages are less severe, with prices rising 35-38% quarter-on-quarter.

Porsche’s 2025 sales fell 10% to 279,449 vehicles, marking its biggest annual decline in 16 years, affected by weak demand, intense competition in China, and EU cybersecurity-related supply gaps for combustion models. Sales were flat in North America, aided by a pull-forward effect, while fully electric vehicles accounted for 22.2% of global deliveries, at the top of its target range.

Zscaler shareholders voted to declassify the board, making all directors stand for re-election each year. The non-binding vote passed despite CEO Jay Chaudhry’s control. Proposed by shareholder advocate James McRitchie, the move comes after Zscaler lost nearly 30% of its value, amid concerns over slower growth and a downgrade by Bernstein questioning its high valuation.

OpenAI will begin testing ads in ChatGPT for U.S. users on the free and $8/month Go plans, while Plus, Pro, Business, and Enterprise tiers remain ad-free. Ads will not influence responses or share user data and will avoid sensitive topics. The move aims to boost revenue to fund AI development and a potential IPO.

Elon Musk called Ryanair CEO Michael O’Leary an “utter idiot” after O’Leary rejected installing Starlink on the airline’s 600+ jets, citing fuel costs and drag. Musk defended Starlink’s feasibility on social media. Airlines increasingly adopt Starlink for in-flight WiFi, though it is seen as a premium service suited to long-haul carriers.

Novo Nordisk’s Wegovy weight-loss pill has seen a strong start in the U.S., with over 3,000 prescriptions filled in its first four days. The pill aims to attract cash-paying consumers and compete with Eli Lilly’s upcoming treatment, with analysts forecasting potential sales of around $1 billion this year if first-mover advantage is maintained.

Riot Platforms signed a 10-year data centre lease with AMD at its Rockdale, Texas site, starting with 25 MW capacity and potentially expanding to 200 MW, generating up to $1 billion in revenue. The company also acquired 200 acres for $96 million, funded by selling bitcoin, expanding its Texas facilities to 1.7 GW power capacity.

ARK Invest’s Cathie Wood predicts the US economy is set for strong growth, driven by deregulation, lower taxes, falling inflation, and rising productivity. She forecasts 6-8% GDP growth, accelerated tech innovation, and potentially negative inflation. Bitcoin is highlighted as a diversification tool, while AI and data centre investments are expected to expand rapidly in 2026.

Morgan Stanley raised ASML’s price target to €1,400, citing strong 2027 earnings from rising semiconductor capex and resilient Chinese demand. The firm expects €46.8 billion in sales and €45.7 EPS, a 57% increase, driven by advanced EUV and DUV chipmaking tools. ASML remains an Overweight “Top Pick” with robust order momentum and capacity growth.

Morgan Stanley raised its price target on Taiwan Semiconductor Manufacturing to NT$2,088, citing strong AI-driven demand, record gross margins, and higher capital spending. TSMC expects AI revenue growth of 55–59% and overall revenue CAGR of 25% through 2029. Analysts view the equity as highly attractive, with supply constraints, not power, limiting AI development.

Morgan Stanley says memory, not compute, is now the main bottleneck for AI, with demand for DRAM and NAND surging. Text-only AI inference could use 35% of DRAM and 92% of NAND in 2026. Prices are rising rapidly, capex is set to accelerate, and top picks include Samsung, SK hynix, Micron, Winbond, Western Digital, ASML, and DISCO.

Truist warns that the early 2026 rally in home construction and building-products shares is overextended and driven by political headlines rather than fundamentals. Earnings remain flat or declining, single-family construction is weak, and renovation growth modest, with meaningful improvement unlikely without further policy support from the Trump administration.

Morgan Stanley views the space technology sector as “Attractive” for 2026, expecting growth from higher launch activity, new products, policy support, and market maturation. Rocket Lab and MDA were upgraded with higher price targets, while Iridium was downgraded due to strategic uncertainty. Strong 2025 performance and supportive U.S. policy underpin optimism for the sector.

Kepler Cheuvreux initiated coverage of Munich Re with a “buy” rating and €600 target, citing its diversified earnings, capital strength, and ability to navigate a shift from peak to normalised pricing. The reinsurer benefits from broad exposure across reinsurance and insurance, a higher technical price floor from frequent secondary catastrophes, and solid 2026 earnings prospects.

Bernstein expects 2026 to be a landmark year for U.S. live entertainment, driven by the FIFA World Cup and broader live event demand. Analyst Ian Moore highlights benefits for Liberty Formula One, Live Nation, and TKO Group, citing structural growth, global attention, and event-driven tailwinds, with the World Cup setting up further opportunities ahead of the Olympics.

UBS downgraded Sanofi to “neutral” from “buy,” cutting its price target to €88 due to pipeline failures, weak replacement power, and regulatory delays. Mid-term earnings forecasts for 2026-2030 were reduced, and share buybacks scaled back. Despite Dupixent peak sales potential, limited pipeline and modest catalysts constrain upside, though total return is forecast at 13.1%.

Upcoming data and events

This week’s economic calendar is busy across major markets. In the US, personal income, PCE inflation, and a Q3 GDP revision are due, alongside S&P PMIs and the University of Michigan consumer survey. The UK releases inflation, unemployment, and retail sales data. Key earnings include Netflix, Visa, Intel, 3M, J&J, P&G, and NextEra Energy.

This information is provided solely for educational and informational purposes and should not be construed as investment advice, advice on specific investments or investment decisions, tax advice, legal advice, or any other form of professional or regulatory advice. The information does not take into account your personal circumstances and is provided to you on the express understanding that it does not constitute advice and should not be relied upon in making any investment decision. Investing in financial instruments involves risk. You should conduct your own research before making any investment decisions and seek the assistance of a licensed financial advisor if you are unsure. No person should act on any opinion or information contained in this document without first obtaining appropriate professional advice. Calamatta Cuschieri Investment Services Limited does not accept liability for any actions, proceedings, costs, demands, expenses, damages, or losses suffered as a result of reliance on the information herein.