Trump withdraws tariffs on Europe. Wall Street is making up for losses

One sentence from President Trump was enough for the New York stock exchanges to change direction. After the strongest declines in three months, we have seen a rebound. But no one can be sure how lasting the American leader's revolt will be.

Wednesday brought solid gains on the New York stock exchanges. The S&P500 index gained 1.16% and ended the day at 6,875.62 points. Nasdaq increased by 1.18% and finished with a score of 23,224.82 points. The Dow Jones gained 1.21% and reached 49,077.23 points. The VIX volatility index, after an almost 20% increase on Tuesday, this time dropped by over 14%.

All this happened after the worst stock market session since October, when the Nasdaq and S&P500 each lost over 2%. Tuesday's declines were explained by the escalation around Greenland, which led to the threat of additional tariffs on the import of goods from eight European countries. But on Wednesday, US President Donald Trump, in his own unique style, withdrew these threats.

First, we received “assurances” that a solution with Europe regarding Greenland could be reached within “a few days” and that the US would not use force to take full control of the world's largest island. Then Donald Trump wrote that on February 1 he would not impose additional tariffs on Europe, which were supposed to be a punishment for Denmark's support in the territorial dispute with the US.

– We have developed a framework for an agreement on the future agreement on Greenland and, in practice, the entire Arctic Region. Based on this agreement, I will not introduce the Tariffs that were to enter into force on February 1 – wrote the US President on the Truth Social platform.

Donald Trump's statement had repercussions not only on the stock market. The previously weakening dollar began to make up for its losses. The EUR/USD rate dropped from over USD 1.17 to USD 1.1688. Gold prices also fell, having reached a new all-time high earlier in the day. Importantly, the yields on 10-year US government bonds also fell, falling by almost 5 basis points.

It is worth remembering that we do not know any specific decisions regarding customs duties or Greenland. This dispute may be revived at any time. For now, markets are happy with the enigmatic “de-escalation”. Without paying attention to the fact that the sources of geopolitical tensions have remained unchanged. Europe is still under pressure from its overseas hegemon, and it is slowly preparing for a confrontation with China.

K.K

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