Trump’s plan to convene talks over Greenland at Davos could be the most important talks between allies, turning Arctic resource geopolitics into immediate market volatility. Greenland’s rare earth reserves, vital for AI, defence, and clean energy, sit at the heart of US competition with China, but Trump’s tariff strategy risks alienating the European allies needed to secure them. Davos could bring either limited de-escalation or a broader trade war, with prediction markets assigning a meaningful chance to some form of Greenland deal before Trump’s term ends. Economists warn that escalating tariffs could weaken the dollar, sustain equity volatility, and raise corporate borrowing costs by structurally repricing geopolitical risk. The core irony is that US pressure may push Europe closer to China and toward independent rare earth supply chains, leaving the Greenland gambit diplomatically costly and economically counterproductive.
EQUITY
While Wall Street is taking a break, European markets plunged into another tariff typhoon over U.S. President Donald Trump's renewed push to acquire Greenland and his announcement of steep new tariffs on multiple EU nations to pressure them into submission. Only isolated bright spots emerged, such as Bayer surging 7% on favourable U.S. Supreme Court news and Beazley skyrocketing 43% on a takeover bid.
GOLD
Gold prices smashed through $4,700, boosted by intense safe-haven demand brought on by deteriorating U.S.-EU trade relations unless the U.S. secures control of Greenland. This standoff intensified after Denmark reinforced its military presence on the island and Trump dismissed peaceful solutions, prompting EU leaders to convene an emergency summit to devise countermeasures. Most analysts remain bullish, projecting gold could hit $5,000 and silver $100 per ounce within months.
OIL
Crude prices were mostly steady with a slight gain, consolidating on a weaker US dollar and positive Chinese economic data. China met its government target of 5% GDP growth for 2025 alongside record-high crude output and refinery throughput, lifting demand sentiment despite new trade risks. However, ongoing global supply surpluses and renewed US-EU tensions might limit near-term gains, with investors awaiting the IEA’s monthly report for clearer insight.
CURRENCY
The dollar is not looking too well after President Trump's threat to impose 10% tariffs on European nations brought about a strong union in opposing his push to control Greenland and a broad "Sell America" trade narrative, triggering a selloff in U.S. Treasury bonds that pushed 10-year yields higher. The dollar index fell to a one-week low as investors, exhausted by abrupt policy shifts, redirected capital toward European currencies despite uncertainty over potential growth downgrades.
