Key Takeaways
- Nordic equity markets fell after the US threatened new tariffs on European countries which oppose its claim on Greenland.
- Danish stocks led the declines as investors assessed its exposure to potential trade escalation.
- Defense stocks and safe-haven sectors outperformed the broader market.
Nordic stock markets fell on Monday, with the Morningstar Nordic Index down 2.3%. The Morningstar Denmark Index was the worst performer, falling 2.6%, while the Morningstar Norway Index declined 1.3%.
“After a strong start to the New Year the last things equity markets needed was an act of self-harm by the US administration,” says Michael Field, chief European markets strategist at Morningstar.
The move came after US President Donald Trump said the United States would impose new tariffs on European countries’ imports unless they acquiesce to a change in control of Greenland. Trump said that Denmark, which has sovereignty over Greenland, will face a 10% tariff on goods exported to the US starting Feb. 1. The same 10% levy would apply to Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland, with the rate set to rise to 25% in June if no agreement is reached.
“Markets have taken the prudent approach to the news and retreated, but this is not some well-planned economic land-grab, rather a wild response to Europe’s push-back on Greenland,” says Morningstar’s Field. “As with the Liberation Day tariffs, they are subject to the Supreme Court ruling, and a rule against them will see the Trump administration going back to the drawing board.”
SEB Senior Economist Robert Bergqvist describes the events of early 2026 – around Greenland and Venezuela, among others – as a systemic geopolitical “tipping point” that seriously weakens Europe’s, including Ukraine’s, position vis-à-vis the United States, Russia and China. “Higher tariffs from the US and Europe are a destructive way forward. The question is what will be the next step: export restrictions that cause disruptions in production chains?”
Danish Equities Particularly Exposed to Tariff Escalation
If Europe were to face a more isolated tariff shock, Bjarne Breinholt Thomsen, Head of Cross Asset Strategy at Danske Bank, believes substitution effects would naturally come into play.
“According to our economists, a 10-percentage point increase in tariffs could shave up to 0.25 percentage points off European growth. This should be seen as a worst-case scenario, and the likely impact would be materially smaller,” he says, adding that the main vulnerability concerns Danish equities.
Accoding to Thomsen, “for many foreign portfolio managers, Danish stocks are not a core benchmark exposure. With limited upside but potentially asymmetric downside risk if Trump were to escalate toward company-specific measures, restrictions or tariffs, this could weigh disproportionately on Danish equities. This dynamic may lead some foreign investors to stay sidelined rather than add exposure at this stage. In our view, this is the key area to monitor.”
Defense Stocks Extend Market Gains
Defense stocks moved against the broader market decline with Sweden’s Saab SAAB B gaining 4.8% and Norway’s Kongsberg Gruppen KOG trading 1.7% higher.
Defensive sectors like telecommunications and insurance companies also showed resilience. Telenor TEL, Elisa ELISA Telia TELIA and Tele2 TEL2 B all posted gains, as did Gjensidige Forsikring GJF and Tryg TRYG.
By contrast, Swedish carmaker Volvo Cars VOLCAR B and Norwegian automotive parts manufacturer Kongsberg Automotive KOA fell on the tariff threats.
Energy stocks were also under pressure, with Equinor EQNR, Aker BP AKER and Vår Energi VAR all trading lower.
While currencies showed muted reactions, precious metals like silver and gold rose.
“Neither the dollar nor the euro would likely function as reliable safe havens in this scenario, leaving precious metals – and possibly the yen – as the primary beneficiaries,” says Christian Schulz, Chief Economist at Allianz.
