Market Report.
📉 An estimated $1.4 trillion was wiped off U.S. stock market value after Trump threatened tariffs on the EU over Greenland, underscoring how sensitive markets are to escalating trade and geopolitical tensions. We enter negative territory for the first time since the beginning of 2026 in the US markets. The volatility index (VIX) has spiked to levels last seen in November, indicating heightened market uncertainty.
📉 The U.S. stock market sold off on Tuesday amid rising tensions over the status of Greenland, with President Trump threatening to impose tariffs on several NATO countries until a deal is reached to sell Greenland to the U.S. The sell-off saw U.S. stocks fall around 2%, the U.S. dollar pull back, gold jump to a record, and Treasury yields surge.
📈 However, some see positive signs in the broader market, such as the strong performance of industrial stocks and the high percentage of S&P 500 stocks above their 200-day moving average. The general expectation is that a deal will be done to avoid further escalation and market turmoil. An agreement that closes the Greenland affair will be interpreted as an event that boosts stock markets.
🗣️ According to Finnish President Alexander StubbHe, the tensions over Greenland between the U.S. and its NATO allies will likely be “defused” by the end of this week. Stubb says he has had recent conversations on the subject in the past 2-3 hours, and these give him “a little bit of hope that we’ll find a way” to resolve the crisis.
🏦 Meanwhile, The Danish pension fund AkademikerPension is exiting its $100 million position in U.S. Treasuries, citing concerns over the U.S. government’s finances. The decision is driven by the fund’s view of “poor U.S. government finances” and the growing debt crisis in the country. The fund plans to have fully closed its U.S. Treasury holdings by the end of the month.
⚠️ Bridgewater’s Ray Dalio has warned that sovereign funds could start to sell off U.S. investments if they no longer see the U.S. as a stable trading partner. This move could be an early sign of a broader shift away from U.S. assets by international investors.
🤔 But maybe that’s what Trump is pursuing, if the international order is crumbling, Trump uses the last straw of US hegemony to take control of everything they can before negotiating the terms of a new order.
🌍 President Donald Trump has brought his fight over Greenland to the World Economic Forum in Davos, Switzerland, renewing his desire to acquire the territory. This marks Trump’s first appearance at Davos since 2020, in what was considered a more restrained first term of his presidency.
✈️ Trump’s plane returned safely to Washington after a minor electrical issue while en route to Davos, landing at Joint Base Andrews. The White House said he will switch aircraft and continue to the World Economic Forum as planned. His speech is still scheduled for 2:30 p.m. CET today.
🇺🇸 Treasury Secretary Scott Bessent told CNBC that Trump is showing the world that the United States is “back,” framing the administration’s recent moves as a signal of renewed U.S. assertiveness on the global stage.
🤝 President Donald Trump expressed confidence that the European Union would continue to invest in the U.S. even if he imposes new tariffs related to his push to acquire Greenland. European Commission President Ursula von der Leyen had criticized Trump’s Greenland threats as a “mistake” that would violate the trade deal he negotiated with the EU last year.
🎯 President Trump appears to be betting that the economic benefits of the U.S.-EU trade relationship will outweigh any fallout from his Greenland demands, and that Europe will ultimately refrain from a major trade conflict in response to his actions.
🪖 However, european countries like Germany, France, Norway, Sweden, Finland, and Estonia have joined Denmark in dispatching troops to Greenland for a military exercise, the first time they have directly confronted Trump’s demands.
⚖️ However, this response is fragile and partial, as it is not a coordinated EU decision but rather individual states acting outside Brussels’ framework, which remains afraid to confront the US directly. The troop deployment as a deterrent measure to raise the threshold of US action, rather than preparation for outright conflict.
🧭 Highlights from the World Economic Forum in Davos:
🇨🇦 Canada’s PM Mark Carney said the rules-based international order is effectively dead, and urged middle powers to form new alliances against coercive superpowers. He said said Canada stands “firmly with Greenland and Denmark,” adding that Ottawa fully supports Greenland’s unique right to determine its own future.
🇫🇷 Macron strongly criticized “bullies” and called for the dismantling of U.S. tariffs on European countries, describing them as “fundamentally unacceptable.”
🇪🇺 He called for more cooperation and collective governance in Europe, saying “without it, competition gives way to relentless competition” from the U.S. Macron said the “crazy thing” is that Europe may be forced to use punitive measures against its ally, the U.S.
🇬🇧 Reform UK leader Nigel Farage is attending Davos for the first time, arguing that globalism is giving way to national self-interest.
🏦 European Central Bank President Christine Lagarde said President Trump’s tariff threats are reviving uncertainty.
💼 UBS CEO Sergio Ermotti warned Europeans against dumping U.S. Treasuries over the Greenland tensions, calling it a “dangerous bet.”
📊 But beyond Greenland and Davos, there are other issues that are of great concern to the markets, such as Japanese debt bonds. JGB yields, especially the 40-year maturity, rebounded after a global selloff, with yields sliding.
📉 The rise in JGB volatility may trigger up to $130 billion of U.S. Treasury selling by risk parity funds, according to Citigroup. However, Japan’s second-largest bank plans to ramp up JGB holdings once the volatility surge is over.
🏛️ The opposition leader Yuichiro Tamaki has called for the Japanese government and the Bank of Japan to take a firm stand on the surging bond yields.
📣 Treasury Secretary Scott Bessent said markets are falling because Japan’s bond market experienced a six‑standard‑deviation move in 10‑year bonds over the past two days, calling it an extreme shock. He stressed that the selloff has nothing to do with Greenland, but is driven entirely by the Japanese bond blowout.
🌏 India and the UAE agreed to double their bilateral trade to $200 billion by 2032. Under the new deal, Abu Dhabi’s state oil firm ADNOC will supply up to $3 billion worth of liquefied natural gas (LNG) to India’s state-owned Hindustan Petroleum Corporation over 10 years starting in 2028. This makes India ADNOC’s largest LNG customer, accounting for 20% of its sales by 2029.
📦 This agreement comes as India is looking to diversify its trade partnerships, after the U.S. imposed 50% tariffs on Indian exports last year. India has recently signed trade deals with the UK, Oman, and New Zealand, as it seeks to reduce its reliance on the U.S. as its biggest trading partner.
🔍 India is trying to build more reliable trade relationships, as it cannot fully trust the “unpredictability” of the U.S. under President Trump.
🎬 On the corporate world, Netflix reported Q4 earnings that narrowly beat Wall Street estimates, with earnings per share of 56 cents vs. 55 cents expected. The stock fell over 4% in after-hours trading, as the results underwhelmed compared to the company’s own internal financial targets.
Market View.
📉 US equity markets have moved into negative territory for the first time in 2026. S&P 500 futures have fallen towards the 6,850‑point area, while Nasdaq 100 futures have declined to around 25,235 points.
💵 The US Dollar Index (DXY) continues to show weakness following last week’s developments, slipping to around 98.60 points. EUR/USD reached 1.1768 during yesterday’s session before pulling back to its current level near 1.1715.
📊 Meanwhile, the US 10‑year Treasury yield has climbed above 4.30%, representing an increase of more than 3.5% since last week.
🥇 Gold futures once again posted a new all‑time high, reaching close to $4,900 per ounce, before easing back to around $4,845 per ounce.
🛢️ The oil market remains range‑bound, with spot Brent crude holding around the $64 per barrel area.
₿ Finally, Bitcoin suffered another sharp pullback, losing the $90,000 level and falling to around $89,100
