Geopolitics continues to be an enduring theme in markets with President Trump’s radar now firmly on Greenland, which is shaking European capitals and investors. As usual, there’s very little detail on how the White House intends to administer his latest announcement of new tariffs, which target eight European countries, in effect the whole zone. The announcement triggered a risk-off move, and the ‘Sell America’ theme is also being talked about, but really the buck could be lower on multiple concerns. Does the eurozone play hard ball and even fire up the trade “bazooka” – the Anti-Coercion Instrument – a tool targeting taxes, tariffs and investment limits on countries trying to coerce the EU? Or does it continue with its seemingly failed appeasement strategy towards POTUS? The former would likely hasten a White House retreat.
The high drama surrounding when the US Supreme Court will issue its tariff decision also returns on Tuesday, after the US Martin Luther King Jnr holiday. That said, January 20 may not see an opinion as it will be put off again, so avoiding the first anniversary of Trump 2.0’s inauguration. The world instead awaits the World Economic Forum in Davos with the US’s largest ever delegation. Themed “The Spirit of Dialogue”, the annual gathering of the world’s top finance people will see President Trump speak on Wednesday, with all eyes on Greenland hints.
This week could finally bring the much-anticipated Fed Chair announcement. Last week, Trump signalled he may prefer to keep the dovish Hassett in his current role. This saw betting markets swing heavily in favour of Warsh, which notably pushed up Treasury yields with the 10-year yield hitting its 200-day SMA. Confirmation of Warsh may mean less Fed rate cuts and some support for the dollar, which is actually not what Trump desperately wants.
Stocks hit more record highs last week, along with more metal peaks from gold, silver and copper. The US benchmark S&P 500 is a whisker away from 7,000, with performance broadening out away from megacap Tech stocks. Industrials, energy and materials have emerged as leaders in 2026, continuing the diversification theme outside US (Big Tech) equities seen last year. Indeed, that broad-based index is still underperforming European and Asian indices, even as the ‘Sell America’ theme hasn’t fully yet taken off again. Bears think Greenland and Trump’s keen weaponisation of tariffs hit sentiment while bulls sniff TACO again and a potential buying opportunity.