Moneycontrol Pro Panorama | Greenland issue thaws, but financial markets on thin ice

US President Donald Trump has retreated from his stance to seize Greenland.

Dear Reader,

On Thursday, Indian equities, like their Asian counterparts, reclaimed more than half the losses incurred on Wednesday, after US President Donald Trump retreated from his stance to seize Greenland. Even the US indices closed higher on Wednesday, buoyed by favourable news that punitive US tariffs on the European Union were averted.

Likewise, the currency markets have been gyrating, as have commodities and cryptos. Only traditional safe haven assets such as gold and silver have been marching upwards.

The continued volatility in global financial markets is palpable. ‘Trump always chickens out (TACO)’ may be a cool way to calm one’s nerves during such geopolitical developments rooted in Trump’s policies. If Trump climbed down from his Greenland stance, there is a strong chance that he will harbour another obsession or victim. Read this Financial Times article (specially for MCPro subscribers) which highlights the power play at the Davos Summit. It is unlikely that Canada and the European Union will forget the Greenland episode. “It has crystallised many of their fears and resentments about the US,” states the FT article.

My colleague Anubhav Sahu writes here that US’ geopolitical actions could reset the global market order. The closest allies of the US such as Canada and the EU are contemplating self-reliance goals for critical industries like defence, energy, AI and the like. Will these challenge or support the US mission of a Western Hemisphere free from hostile foreign incursion? Recent conflicts with Iran, toppling of Venezuelan President Maduro are aimed at implementing the above strategy using coercion, if needed.

For now, it seems that, following economic tariff related stand-offs in 2025 between the US and several nations, 2026 is unfolding to be one where the global markets and supply chains would be reset.

One thing is clear even as Trump softened his stance on Greenland. His actions have triggered a global “Sell America” panic, forcing Wall Street to confront the cost of political instability. The world over, equity markets have been yo-yoing, with a tug-of-war between bulls and bears, reflecting uncertainty over whether recent turbulence marks a structural shift or merely a passing phase, writes my colleague Shishir Asthana here.

While long-term investors still anchor their decisions in earnings, macroeconomic fundamentals, and fiscal-monetary policy signals, the near-to-medium term is likely to be dominated by geopolitics. Changes in economic interdependence, critical supply chains, capital flows, currencies, and bond yields may exert a far greater influence on markets than seen in recent years.

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