Citi downgrades European stocks on Greenland tariff tension

Citi has downgraded European equities to neutral due to tariff risks associated with Greenland. This decision is a reaction to rising transatlantic tensions, particularly Donald Trump's pressure over Greenland. The downgrade reflects a weakening investment backdrop and increased downside risks for earnings as trade tensions come back into focus. Following the announcement, European stocks, which had been outperforming US equities, dropped. In contrast, Japanese stocks have been upgraded to overweight, citing clearer policy signals. The EU is contemplating retaliatory measures against US goods, indicating the potential for the situation to escalate further. Citi warns that uncertainty alone could hinder corporate investment and affect equity valuations. Until clarity on US-EU relations is achieved, Europe's near-term upside is seen as limited.