As investors prepared for US President Donald Trump’s speech at the World Economic Forum in Davos, where his ambition to seize Greenland has dominated discussions and strained relations with important allies, European stocks fell and precious metals set new records on Wednesday, January 21.
This week, markets were shaken when Trump threatened to impose tariffs of up to 25% on a number of European countries, including France, Germany, Britain, and Denmark, in retaliation for their opposition to his Greenland ambitions. The European Commission President Ursula von der Leyen stated that the EU would be “unflinching” in its response to the warning, which sparked discussions about countermeasures in Davos.
European leaders were urged by US Treasury Secretary Scott Bessent to listen to Trump’s arguments and refrain from “reflexive anger.” Investors were awaiting word on whether Trump would intensify the conflict as he was scheduled to speak later in the day.
“If he sticks to his guns about taking Greenland under US control, and if he continues to sideline his closest allies, then risk sentiment could take another dive lower,” said Kathleen Brooks, research director at XTB.
Precious metals, seen as a safe haven during uncertainty, surged to new highs as concerns mounted that the standoff could deepen. Global markets have slumped throughout the week, with Wall Street’s three major indices tumbling on Tuesday as US trade resumed after a long holiday weekend. Futures signaled a possible rebound on Wednesday.
In Asia, Tokyo fell while Hong Kong and Shanghai posted gains. Japanese government bond yields, which had spiked sharply after Prime Minister Sanae Takaichi pledged tax cuts ahead of February’s snap election, retreated after Finance Minister Satsuki Katayama urged “everyone in the market to calm down” and pointed to robust tax revenues and Japan’s lowest dependence on debt issuance in three decades.
In corporate news, British luxury fashion house Burberry gained around five percent in London after reporting stronger sales driven by improving demand from China.