Bazooka
The EU’s threat of a trade ‘bazooka’ to counter Trump’s tariff threats pushed Wall Street lower and precious metals higher.
Greenland-related tensions saw U.S. and European stocks trading in a land of red. The S&P 500 and Nasdaq dropped over 2% lower on Tuesday as the VIX spiked to a high of 20.69. The moves were only amplified by thinner liquidity on Wall Street going into the shortened trading week.
Much of the volatility comes down to one thing: Trump’s desire to own Greenland. His tool of choice to achieve that goal? Tariffs. He threatened 10% tariffs on eight NATO countries that would start in February and rise to 25% by June if a Greenland deal isn't finalised.
EU leaders won’t play ball. They’re planning to counter with their own tariffs against the U.S. – a last resort measure called the Anti-Coercion Instrument or the trade ‘bazooka.’ According to one diplomatic source, that’s US$108B in retaliatory tariffs.
Safe-haven asset gold rallied to a record US$4,714 and the world’s largest gold producer Newmont ($NEM) reaped the benefits. $NEM’s strong rally contributed to the 5.7% one-day move for the VanEck Gold Miners ETF ($GDX).
Silver joined the ascent, printing yet another all-time high in what’s been one of the most aggressive momentum runs of its lifetime. The metal has now set five records in just 20 trading days, driven by a mix of safe-haven demand, tight physical supply and renewed retail speculation.
Things can change quickly in the Trump tariff world, though. And for some traders, it was just another TACO Tuesday. Those who weren't buying safety were diving head-first into buy-the-dip mode. Weakness in tech stocks and retail appetite for lower prices had all the makings of Liberation Day 2.0.
Nvidia ($NVDA), Tesla ($TSLA), and Apple ($AAPL) were the most actively traded but ended the day in red. Coming in fourth was Micron ($MU) with US$17B in daily volume across U.S. exchanges, surprisingly closing 0.62% higher on Tuesday.
Lower down the volume leaderboard – but also defying the broader selloff – were AMD ($AMD), Intel ($INTC), and Boeing ($BA). They were the recipients of selective bids as investors hunted for value.
The message this week is clear: headlines are driving volatility, but dip-buying instincts are very much alive beneath the surface. As earnings season unfolds, strong results could give those investors the conviction they're looking for.
This is not financial advice nor a recommendation to invest in the securities listed. The information presented is intended to be of a factual nature only. Past performance is not a reliable indicator of future performance. The author of this article and other employees of Stakeshop Pty Ltd may hold positions or have financial interests in the company (or companies) discussed above. As always, do your own research and consider seeking financial, legal and taxation advice before investing.
