Greenland rhetoric 'a yawn' for markets, says advisor

Gold vaulted to fresh record highs on Wednesday while US stocks clawed back some of their recent losses, as investors recalibrated their response to President Donald Trump’s latest comments from the World Economic Forum in Davos.

Speaking about NATO burden-sharing and his push to acquire Greenland, Trump told delegates he would not use military force to take the territory. “I don’t have to use force. I don’t want to use force. I won’t use force,” he said, easing at least one source of market anxiety that had fueled a broad “sell America” move a day earlier.

The shift in tone helped stocks rebound from Tuesday’s sharp slide, which had marked the worst day for the major US indexes since October. CNBC reported that by late Wednesday morning in New York, the Dow Jones Industrial Average was up about 0.7%, with similar gains in the S&P 500 and Nasdaq Composite, as traders moved cautiously back into risk assets.

That momentum in optimism accelerated in the afternoon, when Trump revealed he and he and NATO Secretary General Mark Rutte have “formed the framework of a future deal with respect to Greenland," with the result that punitive tariffs announced against a raft of European countries would no longer be implemented.

"Based upon a very productive meeting that I have had with the Secretary General of NATO, Mark Rutte, we have formed the framework of a future deal with respect to Greenland and, in fact, the entire Arctic Region," Trump said in a social media post. "Based upon this understanding, I will not be imposing the Tariffs that were scheduled to go into effect on February 1st."

The state of gold underscored how fragile sentiment remains. The metal broke decisively above $4,800 an ounce for the first time, with spot prices up roughly 2% around mid-morning and intraday highs nearing $4,900. Futures for February delivery also advanced by nearly 2%, extending a powerful run driven by geopolitics, concerns about US policy direction and expectations for lower interest rates.

“There's a bit of fear of missing out on this trade and I think given the geopolitical situation in the world, it's a perfect storm for higher gold and higher silver prices right now,” Bob Haberkorn, senior market strategist at RJO Futures, told Reuters.

Tuesday’s sell-off saw equities tumble, Treasury yields spike above 4.3% on the 10-year at one point, and the dollar weaken as investors rushed to reposition away from US risk. That was followed on Wednesday by a partial reversal as Trump ruled out using force on Greenland and pledged instead to pursue “immediate negotiations” over a possible acquisition.

At the same time, the administration signaled it was not alarmed by the equity slump. Treasury Secretary Scott Bessent told reporters in Davos that officials were “not concerned” about the prior day’s gravitation toward the sell America trade, reinforcing the sense that policy risk may remain elevated even as outright military escalation looks less likely in the near term.

For Ed Cofrancesco, CEO of International Assets Advisory, investors would do well to look beyond the headlines around Greenland, asserting his belief that the issue is not around true ownership but having "a sovereign Greenland [where] the U.S. is in charge of preserving that sovereignty.

"So it's more akin to virtual ownership, and that is in our national interest. Greenland unquestionably has both economic and strategic importance to the US," he told InvestmentNews, pointing to the benefit of accessing its natural resources and rare-earth metals as well as having a military presence there.

"From a markets and investment perspective, this issue is more of a yawn than anything else," Cofrancesco said. "Given the size of our markets and our economy, there won't be an impact one way or the other in the near term."

From his perch at Angeles Investments, Chief Investment Officer Michael Rosen sees the markets "discounting any near-term impact, assuming this will be negotiated away with minimal consequence. Still, he sees enormous tail risks in both the near and long term from escalating geopolitical tensions, whether through a NATO breakup, a disintegration of the EU, or Russian or Chinese aggression against neighboring territories.

"Regardless of the short-term outcome of this particular spat, it should be clear that the world has moved definitively from a rules-based order to one governed by pure power, a positive-sum economic order to a zero-sum, or negative-sum, world," Rosen said. "For investors, this argues for greater portfolio diversification across geographies and asset classes."

Other strategists noted swings that are feeding into a longer-running debate over the dollar’s role in global portfolios. “America First is quietly driving diversification away from dollar assets, especially among government entities,” wrote Joyce Chang, chair of global research at JPMorgan, while stressing that the dollar still dominates global transactions.

Trump used his Davos platform to renew a call for a 10% cap on credit card interest rates and said he would press Congress to adopt the proposal, helping lift bank stocks such as Citigroup and Capital One. The path for that policy remains uncertain, but any move toward tighter caps could have implications for lenders, consumer credit quality and financials exposure in client portfolios.

Complicating the backdrop further, French President Emmanuel Macron floated the possible use of the European Union’s Anti-Coercion Instrument in response to new US tariffs, a tool that could limit American companies’ access to the bloc’s single market.

Additional reporting by Gregg Greenberg.