OPENING CALL

U.S. futures fell and investors sought safe-haven assets as the country emerged from Monday's federal holiday on the cusp of a trade war with the European Union.

The projected fall in stocks Tuesday tracked declines seen in Europe as Trump reiterated his stance on Greenland and said he had agreed to hold a meeting on the issue in Davos.

With rumblings European powers could retaliate in response toTrump's tariff threats for Greenland, Treasury Secretary Scott Bessent spoke to reports at the World Economic Forum and warned it would be "very unwise" for Europe to do so, adding that "everyone should take the president at his word."

Trump also threatened 200% tariffs on French wines and champagnes to push French President Emmanuel Macron to join his peace board for Gaza.

That threat comes after a report published Monday by the Kiel Institute for the World Economy indicated that it was Americans who are bearing nearly the full costs of U.S. tariffs.

It comes amid a selloff in global government bonds as tensions between Washington and Europe undermine confidence in U.S. assets, Exness said.

"In addition, a fresh wave of trade threats has fuelled renewed concerns about the impact on the global economy."

Tuesday will feature fourth-quarter earnings from 3M, US Bancorp, United Airlines and Interactive Brokers Group.

Also taking place Tuesday is a session of the Supreme Court, which hasn't yet issued its decision regarding the legality of Trump's sweeping tariffs.

Economic Insight

Renewed trans-Atlantic trade tensions over President Trump's bid to force a sale of Greenland will hurt European earnings , Citi said.

"The latest step-up in trans-Atlantic tensions and tariff uncertainty dents the near-term investment case for European equities."

Stocks to Watch

Alphabet fell 3.5%, Apple slid 1.7% as investors ditched mega-cap tech stocks amidst souring risk sentiment.

AppLovin declined 10%, appearing on course to extend a four-day losing streak.

Newmont rose 3.2% as investors pivoted to safe-haven assets.

Nvidia and AMD shares both fell around 2% as equities around the world sold off.

RAPT Therapeutics surged 63% after GSK said it agreed to acquire the company for an estimated equity value of around $2.2 billion.

Union Pacific and Norfolk Southern shares fell 0.6% and 0.4% respectively after a merger application was ruled incomplete on Friday.

Watch For:

Netflix fourth-quarter earnings

Today's Top Headlines/Must Reads:

- Supreme Court Will Decide if Fed Independence Has Any Legal Teeth

- Netflix Earnings Could End the Streamer's Stock Slump. The Warner Deal Is in Sharp Focus .

- Market Reaction to Greenland Tensions Has Been Muted, BOE's Bailey Says

MARKET WRAPS

Forex:

The dollar fell against a basket of currencies but a major selloff in the currency on U.S.-European tensions looked unlikely for now, ING said.

"That said, we are a little negative on the dollar this year for macro reasons."

The euro rose to a two-week high against the dollar, but a major escalation in tensions would likely hurt the euro more than the dollar, according to Barclays.

Assuming an escalation is avoided in the near term, the dollar could fall as investors trim bets on the currency rising and increase protection against any declines.

Sterling rose to a one-week high against the dollar but fell against the euro, after U.K. jobs data showed the unemployment rate stayed steady.

Bonds:

Politics was set to keep dominating bond markets with markets tuned toward Trump's special address on Wednesday, Commerzbank said.

The 10-year Treasury yield jumped past 4.25% on renewed tariff uncertainty and growing talk that Europeans could "weaponize" their U.S. assets to retaliate against Trump's aggressive policies toward Greenland, Swissquote said.

"If the dispute over Greenland continues to escalate, it is quite possible that EU investors will sell off U.S. government bonds," BlueBay said, adding the dispute could put pressure on global interest rates.

European economies reducing their holdings of U.S. assets is a risk and adds to concerns that Treasurys are "no longer viewed to be as safe an asset as it once was. Instead, demand for safety is directed into precious metals," according to DBS.

DZ Bank said it expects the 10-year Treasury yield to rise to 4.50% over the next three months with an imminent decision by the U.S. Supreme Court likely to play a contributory role.

Energy:

Oil prices edged lower despite a weaker dollar and robust economic growth in China, with focus on renewed trade tensions across the Atlantic.

Metals:

Gold prices soared past the $4,700 mark for the first time on a weaker dollar and as fears of renewed trade tensions sparked a rush to safe-haven assets.

"Investors are favoring gold and silver over currencies and government bonds amid rising U.S. debt levels and heightened policy unpredictability," ING said.

Copper prices fell in midmorning trading, with futures on the London Metal Exchange down 1.1%

"This has been reinforced by a regulatory clampdown on high-frequency trading following a burst of speculative activity, while exchange-monitored inventories at an eight-year high have helped offset supply concerns," Saxo Bank said. 


   TODAY'S TOP HEADLINES

Baidu's AI Assistant Reaches Milestone of 200 Million Monthly Active Users

Baidu's AI assistant has surpassed 200 million monthly active users, according to people familiar with the matter, as competition intensifies among Chinese tech giants in the AI field.

The company's artificial intelligence-empowered Ernie Assistant is integrated into its flagship Baidu search-engine app and on personal computers.

BHP Upgrades Copper Output Guidance

BHP Group upgraded its annual copper-production guidance amid record-high prices for the industrial metal, but announced another cost overrun on its giant potash project in Canada.

BHP, the world's biggest miner by market value, said Tuesday that it now expects to produce between 1.9 million and 2.0 million metric tons of copper in its fiscal year through June, compared with a prior estimate of between 1.8 million and 2.0 million tons.

Meta, Snap Stock Could Be Hit as More Countries Look to Ban Social Media for Children

Meta Platforms, Snap, and Reddit have been hit by Australia's ban on social media for children. Now the U.K. and France are considering similar measures.

Australia became the first country in the world to enact a social-media ban for under-16s in December after a law that requires 10 popular platforms to prevent anyone under that age from holding an account took effect. Meta's Facebook and Instagram, Snap's Snapchat, and Reddit were among the platforms required to implement the restrictions.

What a Break With Europe Means for the American Economy

President Trump's bid to annex Greenland and unleash tariffs on several European countries has plunged the trans-Atlantic alliance into crisis. If a trade war breaks out, the U.S. economy could feel the pain-from South Carolina to Silicon Valley.

European leaders, many of whom are gathering in Davos, Switzerland, this week for the World Economic Forum's annual meeting, are considering the bloc's options to retaliate, including imposing tariffs on more than $100 billion of American goods, and making it harder for American multinationals to bid on European contracts. A trade war would be devastating for Europe, which already suffers from stagnant growth.

U.S. Economy Can Grow 4%-5% in 2026, Says Bessent. But Voters Have 'Inflation PTSD.'

President Donald Trump is preparing to make a big speech on Americans' affordability concerns at Davos likely Wednesday. Treasury Secretary Scott Bessent kicked things off by blaming the Biden administration for price inflation and backing the prospects for economic growth this year.

"I believe the American people still have inflation PTSD from the biggest inflation in 49 years, and Americans are right to be upset," Bessent said Tuesday in a press conference at the World Economic Forum's annual meeting in Davos-Klosters, Switzerland.

U.K. Unemployment Remains Near Pandemic-Era Highs

U.K. unemployment was unchanged in the three months through November, remaining close to pandemic-era highs and adding to concerns about the economy's health.

The headline rate of unemployment was 5.1% in September through November, unchanged compared with the three months through October, the U.K.'s Office for National Statistics said Tuesday. This was higher than a consensus of economists polled by The Wall Street Journal, which expected 5.0%.

Chinese Policymakers Look Focused on Domestic Demand to Lift Economy

Policymakers in Beijing are planning to boost Chinese domestic demand as part of their battle against entrenched deflationary pressures and plunging investment.

Senior state planners are formulating a five-year plan to lift domestic demand, acknowledging that the world's second-largest economy currently faces an imbalance between "strong supply and weak demand," according to comments from the National Development and Reform Commission to reporters on Tuesday.

Japan's Long-Term Bond Yields Surge as Looming Election Triggers Fiscal Worries

Japan's long-term government bond yields surged to multi-year highs Tuesday, spurred by fears that an upcoming election could lead to a consumption-tax rate cut that might worsen the country's public finances.

A key focus of the campaigning will be a potential cut to Japan's consumption tax, as both ruling and opposition parties seek to win over voters with measures to alleviate the burden of rising living costs.

Iranian Protester Tells of an Uprising Violently Suppressed

(MORE TO FOLLOW) Dow Jones Newswires

01-20-26 0633ET