Nasdaq futures decline amid US trade tensions
United States (US) equity markets closed modestly lower on Friday, ahead of the Martin Luther King Jr. Day long weekend. The pullback was primarily driven by President Trump’s comments indicating a preference to retain Kevin Hassett in his current role as director of the National Economic Council, rather than nominating him as the next Federal Reserve (Fed) chair. This development reduced expectations for a more dovish Fed leadership, triggering selling pressure in equities, a stronger US dollar, and elevated Treasury yields.
Nasdaq 100 futures are trading sharply lower this morning, down approximately 1.11% around the 25,400 level roughly 90 minutes after reopening. This follows President Trump’s weekend threat to impose a 10% tariff on imports from several European allies, including Denmark, Norway, Sweden, France, Germany, the United Kingdom (UK), the Netherlands, and Finland –starting 1 February and escalating to 25% by 1 June – unless the US is permitted to purchase Greenland.
Geopolitical tensions and market implications
The announcement has heightened concerns over potential strain on the North Atlantic Treaty Organization (NATO) alliances and disruption to recent trade agreements with European nations, triggering renewed market volatility.
While there are hopes the US administration may eventually de-escalate these threats – as seen with certain prior tariff announcements – it is evident that securing Greenland remains a core national security objective for the current US administration. The push is framed as essential to counter Russian and Chinese influence in the Arctic, bolster US military presence, and secure strategic resources. As such, we believe the Trump administration’s hawkish stance on this issue is unlikely to be walked back as readily as some other tariff threats.
Beyond ongoing headlines related to these geopolitical developments, key events this week include:
- Wednesday’s confirmation hearing for Fed Governor Lisa Cook (where probability markets currently assign low odds of her dismissal in 2026)
- The long-awaited US Supreme Court ruling on the administration’s use of the International Emergency Economic Powers Act (IEEPA) for tariffs (potentially delayed until 20 February).
Upcoming court rulings and economic data releases
Consensus suggests that any invalidation of IEEPA tariffs would likely prompt a shift to alternative authorities (e.g., Sections 122, 232, or 301), resulting in limited macro impact – though potential implementation delays or refunds could temporarily elevate US Treasury term premia and pressure the US dollar.
Additionally, we are set to receive the Fed’s preferred measure of inflation, the core personal consumption expenditures (PCE) price index, along with S&P flash purchasing managers’ index (PMI) data and earnings from Netflix, Johnson & Johnson, Procter & Gamble, and Intel.