The FTSE 100 experienced a significant drop today, edging closer to the 10,000 mark as Donald Trump intensified his pursuit of acquiring Greenland.

During a volatile trading session, the leading index of blue-chip companies plunged over 140 points in early trades, settling at 10,051. This comes after the index reached a record high of 10,238 just last week.

Although the FTSE 100 managed to recover some losses, it still ended the day down by 68.6 points, closing at 10,126.8.

Similar declines were observed across European markets, with Germany’s Dax falling by 1 percent and France’s CAC 40 dropping by 0.6 percent.

Attention shifted to Wall Street as it reopened, following a closure for Martin Luther King Day, amidst Trump’s Greenland ambitions. The uncertainty led investors to sell, causing the S&P 500 to decline by 2 percent and the Dow Jones to fall by 1.8 percent.

As President Trump is set to discuss Greenland at the World Economic Forum in Davos this week, Neil Wilson, a UK investor strategist at Saxo, noted that “geopolitical drama in spades” is impacting markets globally.

There were further gains for gold and silver as investors worried about the state of the world looked for somewhere safe to park their cash – and again chose precious metals.

Donald Trump is due to hold meetings over Greenland in Davos this week

Gold jumped above $4,700 an ounce for the first time, rising to $4,761, while silver hit a fresh high above $95.50 an ounce.

The record-breaking rally in precious metals has left gold within touching distance of $5,000 an ounce and silver $100 for the first time – levels that seemed improbable not so long ago.

Silver has more than tripled in value since the start of last year making it one of the best performing assets.

Trump’s plans to seize Greenland have sparked alarm in capital cities around the world and rattled financial markets amid fears of the collapse of NATO, a new front in the global trade wars and even recession.

Trump has vowed to impose a 10pc tariff on imports from countries willing to defend Greenland – including the UK, Denmark, Finland, France, Germany, the Netherlands, Norway and Sweden. 

The levy would take effect next month and rise to 25 per cent come June.

In response, European leaders are reported to be considering a ‘bazooka’ of measures, including restrictions on US firms in the EU market.

The International Monetary Fund has warned against a ‘spiral of escalation’ with its chief economist Pierre-Olivier Gourinchas declaring: ‘There are no winners in trade wars.’

The issue is set to dominate this week’s World Economic Forum in Davos, Switzerland.

Kyle Rodda, senior market analyst at Capital.com, said there’s hope that the escalating tensions will be self-limiting ‘if the markets send a signal that his actions are bad for investors and the economy’.

‘But there’s the risk that’s not the case and we are heading for a potentially disruptive standoff between the US and EU,’ he added.

Russ Mould, investment director at AJ Bell, said the mood on the markets could quickly darken if the political fallout intensifies.

‘Despite a difficult start to the week it feels like the market is still in wait-and-see mode over whether there will be a full-blown trade war between the US and Europe,’ he said.

‘On the market Richter scale this is little more than a mild tremor – for now. However, the stakes feel high as world leaders, including Donald Trump, prepare to meet at the World Economic Forum in Davos.

‘Investors will be hoping for some sort of de-escalation deal on Greenland which removes the risk of a break-up or at least serious rupture in the NATO alliance. If the crisis deepens it is unlikely to spell good news for global equities.’

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