LIVE MARKETS-Greenland tariffs? MS says Europe's hit is modest

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GREENLAND TARIFFS? MS SAYS EUROPE'S HIT IS MODEST

Morgan Stanley has crunched the numbers on what the weekend's Greenland-triggered trade flare-up means for Europe Inc, and the main takeaway is that the impact on the region's stocks should remain idiosyncratic rather than broad‑based.

While the move caused a moderate riskoff start in markets on Monday, as EU leaders weigh how to respond to U.S. threats, analysts at the Wall Street bank estimate only 2.2% of MSCI Europe revenues are directly exposed to the new tariffs.

MS notes that roughly 10% of index weight comes from firms with meaningful sales at risk, while nearly half of that exposure sits under IEEPA – which the U.S. Supreme Court may rule on as early as Tuesday.

The bank affirms its overweight on EU defence, arguing the episode strengthens Europe's resolve to boost security spending.

More broadly, a short-term pullback is possible, but structural flows into Europe should resume: "European equities are 2.6 standard deviations overbought... suggesting a slight tactical pullback but then a resumption in performance".

After ending near records on Friday, the STOXX 600 .STOXX was down 1.2%, on track for its biggest daily drop in one month.

(Danilo Masoni)

EARLIER LIVE MARKETS POSTS:

TARIFF TRADES CLICK HERE

EUROPE BEFORE THE BELL: BRACE FOR BIG FALLS CLICK HERE

MORNING BID EUROPE: US PICKS A FIGHT WITH ITS BIGGEST CREDITOR CLICK HERE