SYDNEY - US stock futures slid on Monday after President Donald Trump threatened to slap extra tariffs on eight European nations until the US is allowed to buy Greenland, pushing the dollar down on the safe-haven yen and Swiss franc.
Gold and silver both jumped to all-time highs, while oil slipped on concerns about what an all-out trade war between the US and Europe could mean for global growth and demand.
A holiday in US equity and bond markets made for thin trading and likely contributed to a 0.7 percent drop in S&P 500 futures and a 1.0 percent fall in Nasdaq futures .
In European markets, EUROSTOXX 50 futures and DAX futures both fell 1.1 percent. Japan's Nikkei lost 1.0 percent, and MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.1 percent.
Trump said he would impose additional 10 percent import levies from Feb 1 on goods from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland and Britain, rising to 25 percent on June 1 if no deal is reached.
Major European Union states decried the tariff threats over Greenland as blackmail, and France proposed responding with a range of previously untested economic countermeasures.
The EU's options include a package of its own tariffs on 93 billion euros ($108 billion) of US imports that was suspended for six months in early August and measures under an Anti-Coercion Instrument that could hit US services trade or investments.
Analysts at Deutsche Bank noted European countries owned $8 trillion of US bonds and equities, almost twice as much as the rest of the world combined, and might consider bringing some of that money back home.
"With the US net international investment position at record negative extremes, the mutual interdependence of European-US financial markets has never been higher," said George Saravelos, Deutsche's global head of FX research.
"It is a weaponization of capital rather than trade flows that would by far be the most disruptive to markets."
It should also make for a fraught few days at Davos as leaders from around the world gather at the World Economic Forum, including a large US group led by Trump himself.
Dollar no safe haven
The Bank of Japan meets on Friday and, while no rate hike is expected this time, policymakers could flag a tightening as soon as April.
One added wrinkle is domestic politics given Japanese Prime Minister Sanae Takaichi is expected to soon dissolve parliament to allow for an election in February.
Delayed data on US core inflation and consumption for November are due on Thursday and will refine investor expectations for when the Federal Reserve might cut again.
A run of solid economic news at home has seen markets largely give up on an easing before June, with April priced at 65 percent for no change.
Earnings season continues as banks are joined by a more diverse set of companies, including Netflix, Johnson & Johnson, General Electric and Intel.
In currency markets, the euro recovered from an early dip to rise 0.1 percent to $1.1613 , while sterling clawed its way back up to $1.3387 .
The dollar eased 0.2 percent on the Swiss franc to 0.7995 francs , and 0.3 percent on the yen to 157.70 .
The cash Treasury market was shut, but 10-year futures firmed 3 ticks amid the general search for safety.
Likewise, gold gained 1.5 percent to $4,664 an ounce.
Oil prices eased. Brent dropped 0.5 percent to $63.84 a barrel, while US crude fell 0.4 percent to $59.18 per barrel.
