Global stock markets slid sharply on Tuesday as renewed threats of U.S. tariffs on European goods rattled investors and weighed on risk sentiment across major asset classes.

European shares dropped to their lowest levels in nearly two weeks, with the STOXX 600 falling more than 1%, and London stocks also weakened amid concerns over trade tensions linked to U.S.

Asian markets also reacted negatively, with equities in Tokyo and other regional centres slipping as traders digested the tariff news and its potential impact on global demand. The broader MSCI Asia-Pacific index eased, reflecting a cautious risk-off mood across markets in the region.

The U.S. dollar’s decline versus safe-haven currencies like the Swiss franc and yen supported bullion and defensive assets, while equities bore the brunt of risk aversion.

Some analysts drew parallels to trade tensions seen in previous years, suggesting early signs of “sell America” positioning where global investors reduce exposure to U.S. risk assets.

In Europe, some markets also grappled with specific sector pressures, with exporters particularly exposed to tariff risks as costs for goods shipped to the United States could rise substantially under proposed levies.

Financial stocks felt the strain as yields fluctuated and market volatility increased, while defensive sectors such as utilities and consumer staples showed relative resilience.

The threat of escalating duties on imports from multiple European nations indicated a broader geopolitical challenge for transatlantic economic relations.

Many investors said the impact of the tariff rhetoric was felt not just through direct market moves but through elevated uncertainty over international trade frameworks.

With global leaders and corporate executives gathering at the World Economic Forum in Davos, the tensions were expected to dominate discussions on geopolitics and global economic stability.

Central bank policymakers and financial officials were among participants urging diplomatic engagement to mitigate fallout and protect global growth prospects.

Market watchers highlighted that incoming U.S. corporate earnings data, inflation figures and policy commentary from major central banks later in the week could either amplify the current downturn or provide stabilising signals if economic fundamentals demonstrate strength despite geopolitical noise.

Investors remain alert to how the situation evolves, especially with continued tariff threats and diplomatic pushback shaping market narratives.

Source: Reuters.