Another week, another tariff threat from the White House. This time it was Europe firmly back in the crosshairs, after the US President announced on Tuesday that new levies would be imposed on eight countries, including the UK, France, Germany and, inevitably, Denmark, whose opposition to US control of Greenland placed it front and centre of the dispute. The President’s remarks at Davos did little to steady market nerves. However, a closed door discussion with NATO Secretary General Mark Rutte, followed by a conciliatory social media post, ultimately saw the tariff threat withdrawn. Stocks, which had sold off sharply on the initial announcement, staged a relief rally, although most major indices still closed the week in negative territory. The episode was a familiar reminder that the unpredictability of White House policy continues to drive volatility across markets.

The S&P 500 ultimately ended the week -0.4% lower (in dollars) in what was a holiday-shortened period, with markets closed on Monday for Martin Luther King Jr. Day. The index recorded its sharpest daily decline since October on Tuesday, as investors digested the President’s comments and weighed the renewed risk of a global trade war. While those concerns eased somewhat as the week progressed, local indices did rebound only modestly and not by enough to return them to positive territory. European markets saw a similar pattern, with the MSCI Europe ex-UK index finishing the week down -1.1% (in euros) as geopolitical uncertainty once again took centre stage. The FTSE 100 also ended the week in the red, falling -0.9%, with additional pressure coming from the latest Consumer Price Index (CPI) release, which showed inflation ticking higher once more. In Asia, the Nikkei 225 slipped -0.2% (in yen) as investors continued to assess domestic political uncertainty following Prime Minister Sanae Takaichi’s announcement of an early election next month in an effort to consolidate power. In contrast, Chinese equities bucked the negative trend seen in Western markets, with the Shanghai Composite rising +0.8% (in renminbi).

Gold rallied strongly over the week, benefiting from a familiar mix of geopolitical uncertainty, softer real yields and renewed demand for defensive assets. The escalation in trade rhetoric from the White House, alongside broader concerns around global growth and political stability, prompted investors to rotate back towards perceived safe havens. The precious metal surged by +8.2% over the course of the week to $4,971 an ounce, with a weaker dollar providing additional support. Oil prices also edged higher. Ongoing production restraint from OPEC+ continued to underpin the market, while renewed trade-related tensions and broader geopolitical developments helped Brent crude rise by +2.7% to $65.89 a barrel.

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SJP Approved: 26/01/2026