US stock market futures fall 1% on Monday morning as trade war between the US and EU escalates

The US stock market futures opened in the red on Monday morning after President Trump announced 10% tariff on eight EU nations, as they opposed the acquisition of Greenland by the US. Following the developments, the US market futures opened in the red on Monday morning. The Dow Jones futures fell 360 points, NASDAQ fell 250 points, indicating a volatile trading activity for the day.

10% tariffs on EU nations

Trump’s growing focus on acquiring Greenland has led to soured relations between the European nations and the US. President Donald Trump announced 10% tariffs on key EU nations like Germany, France, Denmark, Norway, Sweden, the United Kingdom, the Netherlands and Finland. The tariffs are punitive measures in response to the nations opposing the sale and military support to Greenland/Denmark.

EU leaders have now opposed the measures, citing a violation of NATO principles and condemned the move as ‘blackmail’.

The US markets ended lower on Friday amid growing uncertainty over the next Fed chair. Markets traded choppy, bouncing back and forth across the unchanged lines following comments from President Donald Trump suggesting National Economic Council Director Kevin Hassett may not be his choice to become the next Federal Reserve chair. Besides, traders kept a close eye on developments in Venezuela, political unrest in Iran and the ongoing Russia-Ukraine war.

Meanwhile, investors overlooked a report released by the Federal Reserve (Fed), which stated that industrial production in the U.S. grew by much more than expected in December. The Fed said industrial production climbed by 0.4% in December, matching an upwardly revised increase in November. Meanwhile, the street had expected industrial production to inch up by 0.1% compared to the 0.2% uptick originally reported for the previous month.

On the sectoral front, steel stocks showed a notable move to the downside, with the NYSE Arca Steel Index falling by 1.2% after ending Thursday's trading at its best closing level in over seventeen years.

Dow Jones Industrial Average declined 144 points or 0.29% to 49,359.33, S&P 500 fell 26 points or 0.38% to 6,940.01, and NASDAQ decreased 236 points or 0.9% to 25,529.