On Wednesday, January 21, U.S. President Trump announced the cancellation of tariffs on multiple European countries concerning Greenland, and stated that a framework agreement has been reached on the issue of Greenland and NATO. This news boosted the stock market, with the U.S. dollar strengthening against the euro and Swiss franc. Gold prices closed above $4800.
Prior to this announcement, Trump stated during a speech at the World Economic Forum in Davos, Switzerland, that there would be no the use of force to acquire Greenland, resulting in an upward trend in the stock market.
Preliminary data on Wednesday showed that the Dow Jones Industrial Average rose by 588.64 points, or 1.21%, closing at 49,077.23 points; the S&P 500 index went up by 78.76 points, or 1.16%, closing at 6,875.63 points; the Nasdaq Composite Index increased by 270.50 points, or 1.18%, closing at 23,224.83 points.
The euro fell by 0.36% against the U.S. dollar to $1.17, following a cumulative increase of over 1% in the previous two trading days. The euro reached $1.168 on Tuesday, its highest level since December 30.
The safe-haven currency Swiss franc depreciated by 0.77% against the U.S. dollar to 0.7958, after a cumulative increase of about 1.5% from Monday to Tuesday.
Last Saturday, Trump announced the gradual imposition of tariffs on EU member states Denmark, Sweden, France, Germany, the Netherlands, Finland, as well as the UK, Norway, until the U.S. is allowed to purchase Greenland.
On Wednesday, Trump wrote on the “Truth Social” website: “Based on my productive meeting with NATO Secretary-General Mark Rutte, we have reached a framework agreement on Greenland and the entire Arctic region.” He continued, “Therefore, I will not implement the tariffs scheduled to take effect on February 1.”
Reuters reported, “We have seen a rebound in the market.” Matt Weller, Global Market Research Director at StoneX, said. “I really think the details may not be that important, even if they will never be revealed. The short-term crisis seems to have passed, and we will wait to see what factors will affect market sentiment next,” he added.
“In terms of the economy, I don’t think the issue of Greenland’s ownership will have an immediate impact,” said Jason Pride, Chief Investment Strategist and Researcher at Glenmede, to Reuters. “The real economic impact is whether we will start imposing tariffs on each other,” he added.
On Wednesday, tech stocks such as Nvidia and AMD led the market rebound, as investors rushed into growth stocks they favored earlier this week. Bank stocks also rose in response to the president’s remarks at the Davos forum that he would ask Congress to implement his proposed 10% credit card interest rate cap. Citigroup and First Capital saw their stock prices rise by about 1%.
Earlier on Tuesday, the stock market experienced a sell-off, with the Nasdaq Composite Index seeing its largest single-day decline since October of last year.
U.S. Treasury Secretary Bennett told reporters in Davos on Wednesday that the Trump administration was “not concerned” about the sell-off from the previous trading day.
Jed Ellerbroek, Portfolio Manager at Argent Capital Management, told CNBC, “If investors truly believed the Greenland dispute was a major geopolitical conflict, then yesterday’s market drop would have been more than 2%.”
On Wednesday, gold prices continued their record-breaking rise for the week, approaching $4900 per ounce at one point. The geopolitical tensions surrounding Greenland and the ongoing steep drop in Japanese government debt continued to drive up demand for safe-haven assets.
Spot gold prices surged by 2% at one point, reaching a historic high of $4887.19 per ounce, before experiencing some pullback in gains. Wednesday marked the first time gold prices broke through the $4800 per ounce level, after just surpassing $4700 per ounce the previous day.
Gold prices closed above $4800 per ounce on Wednesday.
The yield on 10-year U.S. Treasury bonds fell to 4.252%.