Global financial markets experienced a notable recovery after President Donald Trump announced that the United States would not pursue tariffs on Greenland, reversing a policy stance that had unsettled investors throughout the week. The unexpected policy reversal, disclosed late Wednesday, contributed to a reassessment of market risk as traders questioned the necessity of the preceding four-day dispute.
While Trump's presence at the Davos forum on Thursday did little to fully erase investor apprehension about potential additional policy shifts, the immediate threat of new tariffs scheduled for February 1st has been temporarily withdrawn. This development has stimulated a degree of relief across global equity markets, although signs of unease remain amid the ongoing geopolitical climate.
The pan-European STOXX index surged more than 1% during early Thursday trading, building on the S&P 500's 1.16% increase Wednesday, which marked its most significant gain in two months. The volatility index, popularly known as the VIX and often termed the 'fear gauge', retreated from a recent year-to-date peak, reflecting a less jittery outlook among market participants.
Parallel to the equities rebound, the gold price moderated slightly from its record high of $4,887.82 per ounce set on Wednesday, dipping just below $4,800 as investors shifted towards comparatively riskier assets. Despite this pullback, precious metals remain elevated amid persistent geopolitical uncertainties.
Lacking in detail, the agreement between President Trump and NATO Secretary-General Mark Rutte has nonetheless defused immediate tensions related to Greenland. European officials, however, emphasize that the situation is far from fully resolved. Denmark's Foreign Minister Lars Lokke Rasmussen reaffirmed the significance of Denmark’s sovereignty and Greenland's self-governance, dismissing notions of any U.S. acquisition of the territory.
President Trump characterized the pact as positively received by all involved parties, noting it encompasses security and mineral resource cooperation with provisions intended to endure indefinitely. Secretary-General Rutte highlighted the deal’s focus on curbing Russian and Chinese influence in the Arctic region, calling for NATO allies to enhance their security commitments there.
Meanwhile, U.S. Treasury yields declined, supported by a well-received 20-year bond auction and favorable legal indicators. On Wednesday, Supreme Court signals suggested that the court is unlikely to endorse President Trump’s effort to remove Federal Reserve Governor Lisa Cook. Justice Brett Kavanaugh remarked that lowering the threshold for presidential dismissal of Fed governors could severely compromise the Federal Reserve’s independence.
The Federal Reserve is projected to maintain current interest rates at its January meeting, with market participants anticipating further direction from the release of November's Personal Consumption Expenditures (PCE) price index. This inflation measure is closely monitored by officials for setting monetary policy.
Focus in the corporate sector has shifted back to earnings reports, with Intel leading the equities calendar on Thursday. The company’s stock jumped 12% on Wednesday ahead of its results announcement, buoyed by increased demand from the AI data center market and by the U.S. government's recent investment in the firm. Other semiconductor producers shared in the bullish sentiment, particularly in South Korea, where stock indices advanced, positioning the nation’s markets as top global performers this year with gains nearing 20%.
Chart of the Day: Intel shareholders exhibit heightened optimism about impending earnings reports, reflecting confidence not seen in several quarters. Demand from accelerated data center expansions along with government stake acquisition have driven the stock's recent 12% surge and remarkable 152% increase over the prior twelve months.
Key economic events on the schedule include:
- Revised U.S. third-quarter GDP figures and weekly jobless claims data, both to be released at 8:30 AM EST.
- November's PCE price index publication at 10:00 AM EST.
- U.S. Treasury issuances of 10-year inflation-protected securities and 2-year floating rate notes.
- President Trump’s participation in the 'Board of Peace' charter announcement.
- A special European Union summit convened by European Council President Antonio Costa in Brussels.
- Corporate earnings releases from Abbott Laboratories, Freeport-McMoRan, General Electric, Intel, and Procter & Gamble.
Market participants continue to watch for policy clarity and stability, even as the current détente in U.S.-European relations over Greenland provides momentary reprieve. The intersection of geopolitical uncertainty, central bank independence debates, and evolving corporate earnings narratives sustains a complex trading environment.