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Dow Jones futures fall by 1.25% to near 48,900 during the European session on Tuesday, while S&P 500 and Nasdaq 100 futures decline 1.34% and 1.56% to below 6,900 and 25,300, respectively. US stock futures fell as market sentiment sours over rising uncertainty over the United States (US)–Greenland issue.

Europe holds roughly $10 trillion in US bonds and equities, including sizable public sector assets, which could be used as leverage in an escalating trade dispute, per Bloomberg. Meanwhile, shares of European automakers and luxury goods companies fell on Monday, while some defense stocks advanced.

US President Donald Trump threatened on Saturday that 10% tariff would be levied on goods from European Union (EU) members, effective February 1, until the US is permitted to purchase Greenland. Meanwhile, French President Emmanuel Macron reportedly urged the European Union to activate its “trade bazooka,” a measure that could restrict US access to EU markets or impose export controls, among other potential countermeasures.

US indices remain under pressure as domestic labor market data have pushed back expectations for further Federal Reserve (Fed) rate cuts until June. Fed officials have signaled little urgency to ease policy further until there is clearer evidence that inflation is sustainably moving toward the 2% target.

Traders await key US data due this week, including the PCE price indices, Q3 GDP, and S&P PMIs. Markets will also focus on Q4 earnings from companies such as Netflix (NFLX), Charles Schwab, Johnson & Johnson (JNJ), Intel (INTC), and Visa (V).

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