European Stocks Surge Higher After Trump Rows Back On Tariffs Threat

Stocks

Economic

Summary:

European stocks rose strongly Thursday after U.S. President Donald Trump said he will not proceed with the imposition of tariffs on European countries for Greenland, and that he had reached a framework deal on the Danish territory.

At 03:05 ET (08:05 GMT), the DAX index in Germany gained 1.2%, the CAC 40 in France soared 1.3% and the FTSE 100 in the U.K. rose 0.7%.

Trump rows back on tariffs threat

In remarks on Wednesday at the World Economic Forum in Davos, Switzerland, Trump ruled out using military force after weeks of refusing to do so, and in a social media post said he would no longer be imposing tariffs that he had threatened to put into effect on February 1.

The U.S. president added that he and NATO Secretary General Mark Rutte had "formed the framework of a future deal with respect to Greenland and, in fact, the entire Arctic Region" during talks at the Swiss resort.

Regional stock markets had dropped sharply at the start of the week after Trump threatened escalating tariffs on several European countries unless the U.S. is allowed to purchase Greenland, an autonomous Danish territory.

That said, the strength of the traditional alliance between the European Union and the U.S. is now very uncertain, as indicated by ECB President Christine Lagarde walking out of a dinner during a speech by U.S. Commerce Secretary Howard Lutnick on Wednesday.

The European economy needs a "deep review" to face "the dawn of a new international order", Lagarde said earlier Wednesday.

U.S. inflation data in spotlight

There is little in the way of major economic data on the European slate Thursday, but there are a number of important U.S. economic numbers for investors to focus on.

The weekly initial jobless claims release will provide hints about the strength of the labor market, while the latest iteration of third quarter gross domestic product should show economic strength.

However, the most widely-watched figure could well be core PCE inflation for November–the Federal Reserve's favorite gauge of price rises–as investors search for clues over the likely path of U.S. interest rates this year.

Primark sales fell during Xmas period

In the European corporate sector, Associated British Foods (LON:ABF) confirmed that underlying sales at its Primark clothing business declined over the Christmas trading period, in line with the estimates published alongside its profit warning earlier this month.

Bankinter (BME:BKT) reported a 14.4% rise in net profit to a record €1.09 billion in 2025, with the Spanish bank helped by robust growth in off-balance-sheet funds and fee income that offset a decline in net interest income amid falling interest rates.

Swiss healthcare company Galenica (SIX:GALE) said its 2025 sales rose 5.5% to the highest level in its history, with all business segments contributing to growth and the company confirming its EBIT guidance of a 10-12% increase for the year.

Huber + Suhner (SIX:HUBN) said its full-year order intake was up almost 14% from a year earlier, but the Swiss connectivity components maker added that net sales slipped 3.3% amid the strengthening Swiss franc.

Crude steady after U.S. stocks build

Oil prices traded in tight ranges Thursday as the threat of tariffs over Greenland eased, but a build in U.S. crude inventories weighed.

Brent futures dropped 0.3% to $65.02 a barrel and U.S. West Texas Intermediate crude futures fell 0.2% to $60.49 a barrel.

The American Petroleum Institute said U.S. crude inventories rose by just over 3 million barrels in the week ended Jan. 16, after jumping over 5 million barrels in the week before.

Gasoline stocks climbed by 6.21 million barrels, pointing to softer demand, while distillate inventories, which include diesel and heating oil, fell by 33,000 barrels.

The Energy Information Administration is due to reveal official U.S. crude stocks later in the session, a day later due to a U.S. federal holiday on Monday.

Source: Investing

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Add to Favorites

Gerik

Economic

AI Demand Reshapes Energy Market Expectations

The rapid expansion of artificial intelligence is transforming global electricity demand, particularly through energy-intensive data centers. This surge has altered investor sentiment in an otherwise stagnant renewables sector, injecting new optimism that long-term demand growth could restore cash flows. At the same time, it has revived interest in fossil fuels, especially gas, as a stopgap solution to keep power systems stable during the transition.

This relationship is primarily causal. AI infrastructure directly increases electricity consumption, forcing energy systems to respond quickly. In the absence of sufficient grid capacity and storage, fossil fuels become a near-term necessity rather than a strategic preference.

Renewables Scale Faster Than Any Alternative

According to the International Energy Agency, global electricity generation from renewables is expected to rise by 60% by 2030, accounting for 45% of total output. In Europe, renewables already supplied almost 50% of power in 2024, supported by a deep pipeline of solar and onshore and offshore wind projects awaiting grid connection.

Crucially, cost dynamics have shifted decisively. Renewable energy prices have fallen by more than 90% globally, and in 2024, 91% of newly built renewable projects were cheaper than fossil fuel alternatives. This cost advantage is structural, not cyclical, and establishes a clear causal pathway toward renewables dominance once integration barriers are addressed.

Integration, Not Generation, Is the Bottleneck

Despite abundant renewable capacity, Europe faces a critical challenge: integrating variable supply into power markets. Grid congestion, insufficient transmission infrastructure and limited storage capacity suppress price signals and undermine investment returns. This creates downward pressure on electricity prices during peak renewable output, weakening project economics and raising fiscal burdens for governments.

Here, the relationship is again causal. Poor integration directly distorts market pricing, which discourages private investment and slows the pace of decarbonisation despite strong generation potential.

Fossil Fuels As A Transitional Crutch

With AI demand rising faster than grid upgrades, gas has re-emerged as a transition fuel. Analysts note that renewables alone cannot yet provide the stable, round-the-clock power required by data centers. Gas plants can ramp production quickly, making them indispensable under current system constraints.

This reliance is not driven by long-term competitiveness but by system rigidity. Fossil fuels benefit from correlation with AI demand growth today, but they are not the fundamental driver of future energy economics. Wood Mackenzie expects gas to remain part of Europe’s energy mix as far out as 2060, largely because governments must prioritize reliability while cleaner infrastructure catches up.

Storage Economics Remain Unresolved

Energy storage is widely viewed as the key to unlocking renewables at scale. Battery costs have fallen by 90% in less than 15 years, and new chemistries promise longer-duration storage. However, utilization remains uncertain. Long-duration batteries may be used infrequently, depending heavily on weather patterns, which weakens the investment case.

There is also a price compression risk. As more batteries enter the system, arbitrage opportunities narrow because more participants buy electricity at low prices and sell at high prices simultaneously. This creates a correlation between storage expansion and margin compression, complicating private investment decisions.

AI As An Enabler Of The Energy Transition

Beyond consuming power, AI may also transform how energy systems operate. Advanced data analytics can improve grid planning, optimize project design and enhance real-time operations, reducing fuel use and extending asset lifetimes. This creates a reinforcing feedback loop: cheaper renewables drive electrification, electrification increases demand for storage and grid intelligence, and those upgrades further lower clean energy costs.

The European Commission refers to this as the “twin potential” of energy for AI and AI for energy. The bloc’s forthcoming roadmap aims to accelerate digitalisation and AI adoption across the energy system while improving reliability and efficiency, rather than rolling back climate policy to accommodate data-center demand.

Why Renewables Are The Long-Term Winner

Fossil fuels currently benefit from AI-driven urgency, but their role is defensive rather than strategic. Renewables, by contrast, gain from structural cost declines, policy alignment and AI-enabled efficiency gains. While gas and other fossil fuels provide short-term stability, they do not address the core challenge of scaling affordable, resilient energy systems.

In that sense, AI is not delaying the clean transition but compressing it. The immediate response relies on existing fossil infrastructure, but the long-term equilibrium clearly favors renewables as integration improves, storage matures and AI itself becomes a tool for optimizing the energy system.

Source: CNBC

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Nathaniel Wright

Central Bank

Remarks of Officials

Stocks

Bond

Data Interpretation

Daily News

Political

Economic

Forex

The Japanese government is holding to a cautiously optimistic view of the economy, according to its latest monthly report, even as it warns of significant downside risks from U.S. trade policies and domestic political uncertainty.

In its January assessment, the Cabinet Office confirmed its view that the economy is on a path of moderate recovery. However, officials highlighted potential disruptions from American trade policy, particularly for Japan's vital auto industry, and stressed the need to monitor financial market movements.

A Mixed Picture from Key Economic Data

While the headline assessment remains steady, a closer look at the data reveals a complex economic environment.

Consumption Holds Firm as Trade Balance Improves

Private consumption, which constitutes over half of Japan's economy, continues to be a source of strength. The government's report described consumption as "picking up" for the fifth consecutive month.

The only major revision in the assessment concerned the trade and services balance, which was upgraded from being "in deficit" to "roughly balanced," signaling an improvement in the country's trade position.

Inflation Outlook Clouded by a Weaker Yen

On the price front, the report noted that the rise in food costs, a primary driver of inflation, has slowed. The government will continue to watch for signs that this slowdown in price increases is sustainable.

However, the yen's sharp depreciation since October has introduced a new layer of uncertainty. A weaker currency raises the cost of imports, creating cost-push price pressures that could challenge the Bank of Japan's projections for moderating inflation.

Navigating a Recent Contraction and BOJ Policy

Japan's economy contracted at an annualized rate of 2.3% in the third quarter, marking the first time it has shrunk in six quarters. The downturn was attributed to a drop in exports, which suffered from the impact of higher tariffs.

Meanwhile, the Bank of Japan (BOJ) is widely expected to hold interest rates steady at its policy meeting this week. This follows a decision last month to raise its benchmark rate to 0.75%, a 30-year high.

Election Jitters Add to Economic Uncertainty

New political developments have injected further volatility into the economic outlook. On Monday, Prime Minister Sanae Takaichi called a snap parliamentary election for February 8 to seek a mandate for her proposed economic policies.

Her platform has sparked concern among investors, featuring proposals for:

• Increased government spending

• A two-year suspension of the consumption tax on food

The announcement triggered a broad selloff in Japanese bonds, stocks, and the currency. Markets are reacting to fears that these policies could further strain Japan's already challenged public finances.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Ukadike Micheal

Daily News

Stocks

Political

Remarks of Officials

Danish Prime Minister Mette Frederiksen has signaled a willingness to discuss the U.S. "Golden Dome" missile defense plan with Washington, a major development in the ongoing strategic negotiations over Greenland and Arctic security.

Danish Prime Minister Mette Frederiksen addresses the media regarding U.S. proposals for Greenland.

In a statement on Thursday, Frederiksen described discussions on Arctic security between U.S. President Donald Trump and NATO Secretary General Mark Rutte at the World Economic Forum in Davos as "good and natural."

Trump Announces "Framework" Deal

The Danish response follows President Trump's announcement on Wednesday that he had secured a "framework" deal concerning Greenland. According to Trump, the agreement includes U.S. and European access to the territory's mineral rights and collaboration on the Golden Dome initiative.

This marks a strategic shift for the U.S. president, who has previously pushed for outright control of the self-governing Danish territory and had not ruled out using military force to achieve his objectives.

Sovereignty Remains Non-Negotiable

While opening the door to negotiations, Prime Minister Frederiksen drew a clear line, emphasizing that Denmark's sovereignty is not up for debate. She confirmed that she had spoken with NATO's Rutte before and after his meeting with Trump, stating the military alliance is "fully aware" of Copenhagen's stance.

"We can negotiate on everything political; security, investments, economy. But we cannot negotiate on our sovereignty," Frederiksen stated. "I have been informed that this has not been the case either."

She added, "The Kingdom of Denmark wishes to continue to engage in a constructive dialogue with allies on how we can strengthen security in the Arctic, including the US's Golden Dome, provided that this is done with respect for our territorial integrity."

Understanding the Golden Dome System

First revealed in May of last year, the Golden Dome is a proposed multi-billion dollar missile defense shield designed to protect the U.S. from all missile attacks. It is often compared to Israel's "Iron Dome" system.

In an interview with CNBC's Joe Kernen, Trump confirmed Greenland's role in the plan. "They're going to be involved in the Golden Dome, and they're going to be involved in mineral rights, and so are we," he said, adding that the deal would last "forever."

Tariffs Halted as Talks Progress

In a related move, President Trump announced on Truth Social that he would suspend planned tariffs against eight European countries that had opposed his earlier plans to acquire Greenland.

"Additional discussions are being held concerning The Golden Dome as it pertains to Greenland," Trump wrote shortly before his CNBC interview. "Further information will be made available as discussions progress."

The update provided an immediate boost to stock markets, with further gains anticipated globally on Thursday following the de-escalation of trade tensions.

Risk Warnings and Disclaimers

Add to Favorites

James Riley

Political

Remarks of Officials

NATO Secretary General Mark Rutte outlines the alliance's strategic priorities during the World Economic Forum in Davos.

NATO Secretary Mark Rutte confirmed on Thursday that he and U.S. President Trump discussed how the transatlantic alliance can best defend the Arctic from growing Russian and Chinese influence. The conversation took place during the World Economic Forum in Davos.

Greenland at the Center of Strategic Tensions

The meeting follows repeated statements from President Trump expressing a desire to acquire Greenland, a Danish overseas territory, on national security grounds. These ambitions have reportedly placed a strain on the NATO alliance.

However, on Wednesday, Trump ruled out the use of force. After his talks with Rutte, he suggested a deal might be achievable to resolve the dispute.

Forging a Unified NATO Approach

Speaking at a panel, Rutte described his meeting with Trump as a "very good discussion." He explained their focus was on how NATO allies can collectively ensure Arctic security. This strategy would involve all seven NATO nations with territory in the region, extending beyond just Greenland.

According to Rutte, a key objective from the conversation is to develop a clear plan to counter Russian and Chinese activities.

"One workstream coming out of yesterday... is to make sure when it comes to Greenland, particularly, that we ensure that the Chinese and the Russians will not gain access to the Greenland economy (or) militarily to Greenland," Rutte stated.

Further talks are expected to build on a meeting held in Washington last week, which included delegations from the United States, Denmark, and Greenland.

Risk Warnings and Disclaimers

Add to Favorites

Patrick Turner

Cryptocurrency

Central Bank

Stocks

Bond

Data Interpretation

Traders' Opinions

Economic

The popular belief that inflation is on a permanent decline is facing a serious challenge. A new analysis suggests that U.S. inflation could rebound and surge past 4% by mid-2026, creating a difficult environment for Bitcoin investors who have been betting on interest rate cuts.

This forecast arrives as global bond yields are already climbing, injecting fresh uncertainty into the market for volatile assets like cryptocurrencies. Experts warn that any delay in the Federal Reserve's plans to ease monetary policy could trigger even greater market swings.

Study Warns of Resurging US Inflation

In a recent report, Adam Posen, president of the Peterson Institute for International Economics, and Lazard CEO Peter R. Orszag argue that U.S. living costs are set to rise more than many expect. They contend that the disinflationary benefits from AI-driven productivity gains will be outweighed by a combination of tariffs, a shrinking labor pool, and loose fiscal policy.

While many market participants are focused on falling housing inflation and productivity boosts, Posen and Orszag believe these factors are not enough to keep prices down. Their analysis points to several underlying pressures that could reignite inflation.

Tariffs, Labor, and Deficits Fuel Price Pressures

The study identifies three primary drivers that could push inflation higher:

1. Delayed Tariff Impact: Tariffs implemented during the previous U.S. administration are still working their way through the economy. The researchers project these will add approximately 50 basis points to headline inflation by the middle of 2026.

2. Labor Shortages: Potential deportations could shrink the available labor force, leading to higher wages as companies compete for workers. This, in turn, could fuel demand-driven inflation.

3. Loose Fiscal Policy: Relaxed government spending could cause the budget deficit to swell to over 7% of the nation's GDP, further stimulating the economy and pushing prices upward.

Posen and Orszag also warn that shifting public perceptions about inflation and already loose financial conditions could amplify the upward pressure on consumer prices.

Market Impact: Bitcoin and Bond Yields Under Pressure

This inflationary outlook clashes with current market sentiment. In 2025, the U.S. core inflation measure fell to around 2.7%, encouraging major banks to forecast interest rate cuts of 50 to 75 basis points. Cryptocurrency traders had priced in even more aggressive easing from the Federal Reserve.

However, the bond market is already signaling trouble. The 10-year U.S. Treasury yield recently climbed to 4.31%, a five-month peak, while a sharp sell-off in Japanese bonds contributed to rising yields globally.

Higher yields on government bonds increase the opportunity cost of holding non-yielding assets like Bitcoin and riskier investments like stocks. In response to this pressure, Bitcoin fell nearly 4% over the past week, trading near $90,000.

Analysts at the Bitunix exchange suggest the biggest policy risk isn't that the Fed cuts rates too soon, but that it becomes overly cautious. By ignoring structural disinflationary forces, policymakers might be forced into a much larger and more disruptive policy shift in the future, a scenario the market is beginning to price in as "delayed compensation."

What This Means for Crypto Investors

The combination of these economic factors creates a complex and challenging picture for investors. The core arguments from the new inflation study highlight several key risks to watch:

• Lingering Tariffs: Trump-era trade policies are expected to contribute to inflation through mid-2026.

• A Tighter Labor Market: A shrinking workforce could trigger wage-driven price hikes across the economy.

• Swelling Deficits: A budget deficit exceeding 7% of GDP poses a significant inflationary threat.

• Policy Miscalculation: Markets could face an abrupt correction if the Federal Reserve fails to address structural economic shifts correctly.

For now, global investors and crypto traders are closely monitoring these developments, as the dream of sustained disinflation and easy money comes under question.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Samantha Luan

Political

Economic

U.S. President Donald Trump attends a bilateral meeting with NATO Secretary General Mark Rutte on the sidelines of the World Economic Forum (WEF) Annual Meeting on January 21, 2026 in Davos, Switzerland.

U.S. President Donald Trump announced Wednesday that he and NATO Secretary General Mark Rutte have agreed on what he called a "framework of a future deal" involving Greenland, prompting him to pull back threatened tariffs on European countries that were set to take effect Feb. 1.

Details, for now, remain elusive. Trump described the framework as more of a "concept" in an interview with CNBC's Joe Kernen, saying it would involve U.S.-European collaboration on a proposed Golden Dome missile defense system and access to mineral resources in Greenland.

The relief expressed by European leaders was swift and palpable.

Danish Foreign Minister Lars Lokke Rasmussen said on X that the day is "ending on a better note than it began" — though he added that Denmark's "red lines" should be respected.

Netherlands Prime Minister Dick Schoof and Italian Prime Minister Giorgia Meloni, while welcoming the news, also urged continued cooperation between allied nations.

The "sell America" trade that rattled investors earlier this week quickly reversed on the news. U.S. stocks shot up Wednesday stateside, with major indexes climbing more than 1% by the close, while the 10-year Treasury yield fell and the U.S. dollar index strengthened.

Other topics Trump discussed with CNBC include his pick for the next Federal Reserve chair, U.S. involvement in Iran and his push to cap interest rates on credit cards.

The developments capped off a striking day at Davos, whose theme this year was "A Spirit of Dialogue," even as discussions across the conference were dominated by frayed alliances and geopolitical tension.

But the story isn't over yet. The European Council is having an extraordinary meeting Thursday, while Trump is set to participate in a Board of Peace ceremony the same day.

European tariffs may have been averted in the nick of time, but the clock is still ticking on other issues.

What you need to know today

U.S. has a Greenland deal 'framework': Trump. The U.S. president said Wednesday he and NATO Secretary General Mark Rutte have formed a "framework of a future deal with respect to Greenland," prompting him to call off threatened tariffs on European countries.

European Council meeting and Trump's Board of Peace ceremony. Even though tariffs are off the table, European nations will still convene on Thursday to discuss the U.S.' recent overtures. Separately, Trump will be having a Board of Peace ceremony the same day.

OpenAI looks for Middle East investments. The Sam Altman-led firm is in talks with sovereign wealth funds in the Middle East to try to secure investments for a funding round expected to total around $50 billion, CNBC confirmed on Wednesday

U.S. stocks rebound as Trump retracts tariffs. Major U.S. indexes popped more than 1% on Wednesday, led by tech stocks. Asia-Pacific markets rose Thursday, with South Korea's Kospi topping the 5,000 mark for the first time during intraday trading.

[PRO] Early signs of a 'death cross.' The pattern occurs when a stock's short-term moving average falls below its longer-term one, and is seen as a signal that more downside may be ahead. One major AI stock is nearing this bearish threshold.

And finally...

Trump's much-anticipated address at the World Economic Forum drew thousands, with attendees queuing for hours to get into the Congress Hall. I was one of them. Even Blackstone Group CEO Steve Schwarzman had to wait in line with the rest of us.

As the crowd packed in, the atmosphere began to resemble something closer to a star- studded concert than a policy forum. Trump was met with loud applause as he took the stage for what many billed as the most closely watched speech of this year's Davos.

After more than an hour, Trump turned to the topic many in the room had been bracing for. "Would you like me to talk about Greenland?"