Markets rallied after US President Donald Trump called off tariffs on European allies on Wednesday following his speech at the World Economic Forum in Davos.
However, the relief proved short-lived, suggesting that while levies and military action were ruled out, lingering concerns over a potential Greenland takeover and Fed intervention at home continued to weigh on investor sentiment.
Global Markets Experience Short-Lived Relief
Shortly after Trump walked back earlier promises to impose tariffs on eight European countries, Bitcoin reclaimed the $90,000 level. The move reflected investor relief amid signs of de-escalation following a volatile week.
US equities also stabilized. The S&P 500 rose 1%, recovering part of the 2.1% decline recorded a day earlier after Trump’s original tariff announcement. The Nasdaq posted similar gains. Meanwhile, the Dow Jones Industrial Average jumped 550 points.
BULL MARKET BACK ON
Trump cancels tariffs $SPY $QQQ pic.twitter.com/cnz0seRZ94
— Justin Banks (@RealJGBanks) January 21, 2026
The relief, however, appeared short-lived. The dollar remained under pressure, edging lower against both the euro and the yen.
Demand for gold also remained firm, with prices hovering near $4,839, up around 1% from the previous day.
Despite Trump’s tariff reversal and his assurance that the United States would not use force to acquire Greenland, investor confidence remains fragile. The remarks did little to ease broader concerns about geopolitical risks and policy uncertainty, which continue to shape market sentiment.
Greenland Push Meets Fed Independence Fears
Trump’s firm push for the United States to acquire Greenland did little to fully eliminate uncertainty. Though the president disclosed on social media that the United States and Europe had “formed the framework of a future deal,” the deal has not yet been closed, and its details remain unknown.
If it falls through, Trump already anticipated that consequences would follow if the European Union failed to meet US demands.
“We want a piece of ice for world protection. You can say yes, we will be very appreciative. You can say no, and we will remember,” the US President said.
At the same time, Trump renewed calls for looser monetary policy, sharply criticizing the Federal Reserve. He targeted Chair Jerome Powell, calling him “stupid” and accusing him of maintaining overly restrictive interest rates that he said were weighing on economic growth.
Concerns about potential political interference in the US central bank have rippled through financial markets in recent weeks amid heightened investor unease.
Several prominent business leaders have publicly defended the principle of central bank independence. Last week, JPMorgan Chase CEO Jamie Dimon criticized the Department of Justice’s decision to pursue a criminal investigation into Powell.
“This is probably not a great idea and in my view, it will have the reverse consequences of raising inflation expectations and probably increase rates over time,” he told reporters during a conference call.
Despite the criticism, Trump did not soften his stance. He concluded his remarks by expressing confidence that the next individual selected to replace Powell as chair would “do the right job.”
Overall, investors remain cautious about what may come next.
