The New York Stock Exchange (NYSE) and Nasdaq are closed today in observance of Martin Luther King Jr. Day. Markets are digesting news regarding new U.S. tariffs on European goods related to a diplomatic standoff over Greenland. This has triggered a “flight to safety,” driving Gold and Silver to new record highs. US futures are down sharply but as the US markets are closed today we will have to wait until tomorrow to see where the S&P 500 opens. This new crisis could trigger an early trend reversal. When markets are near their tops and overbought, bad news can trigger the reversal.
In response to Trump’s new tariffs the EU is considering activating its Anti-Coercion Instrument, a powerful trade tool designed to fight back against “economic blackmail.” This would allow the EU to restrict U.S. tech companies from participating in public contracts (tenders) and could limit their ability to provide digital services across the bloc. It could also be used to block or restrict new American investments in the European market. Because of these threats, U.S. tech stocks (the “Magnificent Seven”) may see significant volatility when markets reopen tomorrow, as they are highly exposed to European revenue.