European Markets Shaken: Bank Stocks Slide as Trump’s Tariff Threats Loom Over Davos

European equities extended their losses on Wednesday morning, with the STOXX 600 dipping 0.1%. The financial services and banking sectors were the hardest hit, each falling 0.6% as trade tensions intensified. The primary catalyst remains President Donald Trump’s threat to impose a series of escalating tariffs on eight European nations starting February 1st, linked to the geopolitical dispute over Greenland.

Markets are currently in a "wait-and-see" mode ahead of Trump’s speech at the World Economic Forum in Davos later today. Despite the macro gloom, Rio Tinto shares surged 3.1% following better-than-expected quarterly production, and Barry Callebaut soared 5.9% on leadership news. In the UK, the FTSE 100 remained flat as services inflation met Bank of England estimates, providing a minor cushion against the broader regional sell-off.