Market reacts to Trump ruling out force in Greenland 

President Trump’s statement at the World Economic Forum in Davos that the United States will not use military force to acquire Greenland has had a noticeable calming effect on markets today.
US equities rebounded after earlier weakness, with the Dow and broader indices moving higher as Treasury yields eased and the US dollar stabilised following earlier declines. This suggests that investors welcomed the removal of a tail risk associated with unpredictable geopolitical escalation, according to capital.com.

The recovery came after US President Donald Trump backtracked on his strong stance on Greenland and said he would no longer impose tariffs on European nations that were set to begin in February.

He indicated that a deal framework was formed, easing trade tensions that had grown throughout the week, reinforcing his view from a speech at Davos earlier in the day, in which he said he would not acquire Greenland by force.   

The move helped reverse some of the sharp selloffs seen earlier in the week when Trump’s prior rhetoric (including tariffs and possible forceful acquisition of Greenland) sparked fear of a deeper rift with NATO allies and broader geopolitical instability. That episode had weighed on sentiment and contributed to markets’ worst losses since October as investors sought clarity.

By publicly ruling out military intervention, the statement removed one of the least credible but most destabilizing scenarios markets had been contemplating, helping to reduce risk premia and restore a bit of calm to asset prices.

Before the clarification, the US dollar weakened as traders began to price in geopolitical instability emanating from the US itself, a relatively unusual driver. Alternative safe havens, such as the Japanese yen, Swiss franc, and gold, strengthened on that narrative. With the force-off-the-table comment, some of that safe-haven bid has unwound, at least temporarily.