European equities slipped and precious metals hit fresh records on Wednesday, January 21, as investors braced for US President Donald Trump’s address at the World Economic Forum in Davos, where his drive to seize Greenland has dominated discussions and strained relations with key allies.
Markets have been rattled this week after Trump threatened tariffs of up to 25 per cent on several European nations, including France, Germany, Britain and Denmark, in retaliation for their opposition to his Greenland ambitions. The warning prompted talk of countermeasures in Davos, where European Commission President Ursula von der Leyen said the EU would be “unflinching” in its response.
US Treasury Secretary Scott Bessent urged European leaders to avoid “reflexive anger” and to sit with Trump to hear his arguments. With Trump set to speak later in the day, investors were waiting for clarity on whether he would escalate the confrontation.
“If he sticks to his guns about taking Greenland under US control, and if he continues to sideline his closest allies, then risk sentiment could take another dive lower,” said Kathleen Brooks, research director at XTB.Entertainment center
Precious metals, seen as a safe haven during uncertainty, surged to new highs as concerns mounted that the standoff could deepen. Global markets have slumped throughout the week, with Wall Street’s three major indices tumbling on Tuesday as US trade resumed after a long holiday weekend. Futures signaled a possible rebound on Wednesday.
In Asia, Tokyo fell while Hong Kong and Shanghai posted gains. Japanese government bond yields, which had spiked sharply after Prime Minister Sanae Takaichi pledged tax cuts ahead of February’s snap election, retreated after Finance Minister Satsuki Katayama urged “everyone in the market to calm down” and pointed to robust tax revenues and Japan’s lowest dependence on debt issuance in three decades.
In corporate news, British luxury fashion house Burberry gained around five percent in London after reporting stronger sales driven by improving demand from China.