Markets Reel as Greenland Tariff Fears Trigger Risk-Off Surge

Global stock indices dipped on Thursday as concerns over potential U.S. tariffs on Greenlandic materials triggered a broad-based retreat from risk assets. The S&P 500 (SPX) closed 1.8% lower, marking its steepest one-day drop in three weeks, while the Nasdaq Composite fell 2.1%. Industrial and materials sectors bore the brunt of the sell-off, with the S&P 500 Materials sector declining 3.2% and Industrials shedding 2.7%. These moves followed unconfirmed reports of a proposed 25% tariff on Greenlandic mineral exports, including rare earths and uranium, citing national security concerns. The shift in market sentiment was mirrored in the safe-haven rally. The U.S. Dollar Index (DXY) climbed 1.1% to 104.87, its highest level since November 2024, while gold futures (GLD) rose 2.3% to $2,315 per ounce, their strongest daily gain in six weeks. The mining-focused GDX index jumped 4.5%, reflecting heightened demand for exposure to hard assets amid trade uncertainty. Investors interpreted the tariff speculation as a signal of escalating trade fragmentation, dampening confidence in global supply chains. The developments come amid heightened diplomatic friction between the U.S. and Denmark, which governs Greenland. While no formal policy has been enacted, market participants reacted swiftly to the rumors, underscoring the sensitivity of global financial markets to geopolitical risk. The volatility spill over into commodity markets, with base metals seeing mixed but generally negative moves, as investors reassessed the outlook for industrial demand and trade flows.