European leaders racing to respond to the threat of U.S. tariffs for opposing President Trump’s plan to take control of Greenland have an arsenal of options, including trade retaliation, reducing defense ties and a “bazooka” to defend against economic coercion. Individually, the nations Trump has threatened with economic measures can do little about his 10% tariffs, but as a unit they could raise the cost of using the levies to extract concessions on Greenland, a semiautonomous Danish territory. The European Union already has a list of U.S. goods worth more than $100 billion on which it could impose retaliatory tariffs. The bloc also has the power to withhold key parts of its trade agreement with the U.S., which Trump has called “a giant deal.” In crisis talks Sunday, EU ambassadors also discussed using a never-before-deployed tool - often dubbed the bazooka - that allows them to fight back when under economic duress from another country. The ambassadors didn’t reach a decision on which route to pursue. Diplomats said there is still time for talks with the U.S. and internal discussions before the bloc decides how to respond.

The Swiss market ended on a weak note on Friday after languishing in negative territory right through the day's trading as investors refraining from any significant buying amid a lack of directional clues. The benchmark SMI ended down by 62.73 points or 0.47% at 13,413.59, about 40 points off the session's low of 13,373.86. Richemont tumbled 5.39%, weighed down by a rating downgrade by Bank of America. The luxury retailer recorded an increase in group sales during the third quarter ended 31 December 2025, with revenue reaching €6.4bn ($7.43bn). At constant exchange rates, quarterly sales were up 11% compared with the same period a year earlier. Sika ended lower by 2.59%. Nestle, Holcim and Sonova lost 1.67%, 1.37% and 1.22%, respectively. Givaudan, Logitech International, Lonza Group, Swiss Re and Amrize ended down by 0.6 to 1.1%. Sandoz Group gained nearly 2%. Novartis, Roche Holding, Galderma Group, Schindler Ps, Straumann Holding, VAT Group, Partners Group and Julius Baer moved up 0.5 to 1%.

Europe
The major European markets closed lower on Friday amid renewed concerns about geopolitical tensions and uncertainty surrounding French budget negotiations. Also, investors chose to take some profits, cashing in recent gains. Geopolitical concerns weighed as Greenland worries returned to the fore, with media reports suggesting that European troops are landing in the country to defend it against real U.S. military threat. The deployment of troops from several European countries and other North Atlantic Treaty Organization (NATO) allies was announced after high-level negotiations between Denmark and U.S. officials ended in stalemate on Thursday. On the political front, the French government has postponed parliamentary discussions on its budget to next Tuesday. The discussions were originally scheduled to take place today. The pan European Stoxx 600 edged down 0.03%. The U.K.'s FTSE 100 ended 0.04% down, Germany's DAX slid 0.22% and France's CAC 40 lost 0.65%. Switzerland's SMI shed 0.47%. Other markets in Europe closed mixed. Austria, Belgium, Czech Republic, Denmark, Iceland, Norway, Portugal, Russia, Spain and Turkiye closed higher. Finland, Greece, Netherlands and Poland ended weak, while Ireland and Sweden closed flat. In the UK market, BAE Systems, Natwest Group, Smiths Group, Schroders, National Grid, Standard Chartered, British Land Company and The Sage Group gained 1.4 to 2.3%. Pearson, Metlen Energy & Metals, Entain, Antofagasta, Endeavour Mining, Glencore, Anglo American Plc., and Pershing Square Holdings lost 2 to 4%. In Germany, Brenntag, BASF, Deutsche Telekom and Continental lost 2 to 4%. SAP, Porsche Automobil Holding, Volkswagen, Bayer, BMW, Adidas and Symrise closed lower by 1 to 1.9%. Daimler Truck Holding declined after reporting a drop in 2025 sales. Continental, Siemens, Zalando, Bayer, Adidas and Symrise also drifted lower. Siemens Energy climbed more than 5%.

United States
Stocks moved to the upside in early trading on Friday but quickly gave back ground and showed a lack of direction over the remainder of the trading session. The major averages spent much of the day bouncing back and forth across the unchanged line before eventually closing modestly lower. The Dow dipped 83.11 points or 0.2 percent to 49,359.33, the Nasdaq slipped 14.63 points or 0.1 percent to 23,515.39 and the S&P 500 edged down 4.46 points or 0.1 percent to 6,940.01. For the tech-heavy Nasdaq slid by 0.7 percent, while the S&P 500 and the Dow fell by 0.4 percent and 0.3 percent, respectively. The choppy trading on Wall Street came following remarks from President Doanld Trump suggesting National Economic Council Director Kevin Hassett may not be his choice to become the next Federal Reserve chair. 'I see Kevin's in the audience, and I just want to thank you. You were fantastic on television today,' Trump said during an appearance at the White House. 'I actually want to keep you where you are, if you want to know the truth.' Hassett had been seen as the frontrunner to replace Fed Chair Jerome Powell, whose term expires in May, but prediction markets now show former Fed Governor Kevin Warsh has surged into the lead following Trump's remarks. Most of the major sectors ended the day showing only modest moves, contributing to the lackluster close by the broader markets. Considerable strength was visible among commercial real estate stocks, however, as reflected by the 1.2 percent gain posted by the Dow Jones U.S. Real Estate Index. Semiconductor stocks also extended the rally seen during Thursday's session, driving the Philadelphia Semiconductor Index up by 1.2 percent to a record closing high. On the other hand, steel stocks showed a notable move to the downside, with the NYSE Arca Steel Index falling by 1.2 percent after ending Thursday's trading at its best closing level in over seventeen years.

Asia
Asian stock markets are showing mixed trends at the start of the new week. The focus is on Chinese economic data. Gross domestic product (GDP) rose by 4.5 per cent in the fourth quarter, but remained just below the forecast of 4.6 per cent growth. However, Beijing achieved its official growth target and continued the real GDP growth of 5 per cent from 2024. While the Shanghai Composite is up 0.3 per cent, the Hang Seng Index in Hong Kong is down 0.9 per cent.

Bonds
In the U.S. bond market, treasuries have moved sharply lower over the course of the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, surged 7.1 basis points to a four-month closing high of 4.231 percent.

Analysis
Bank of America raises Swatch target to CHF 150 (135) – Underperform
Bank of America raises LVMH target to EUR 750 (675) – Buy
Bank of America raises ASML target to EUR 1,373 (1,205) – Buy

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