Global markets steadied on Thursday as investors reacted to a sharp easing of geopolitical tensions after US President Donald Trump backed away from tariff threats and ruled out the use of force to seize Greenland.
The shift in tone lifted equities, pressured safe-haven assets such as gold, and supported the US dollar, though traders remained cautious after a volatile week driven by policy uncertainty.
Trump’s comments at the World Economic Forum in Davos and on his Truth Social platform helped calm fears of a rupture between the US and its NATO allies.
“I won’t do that,” Trump said of using force to secure Greenland. “Okay? Now everyone’s saying ‘oh, good’ that’s probably the biggest statement I made because people thought I would use force. I don’t have to use force, I don’t want to use force, I won’t use force.”
Asian markets rebound on risk relief
Asian equities broadly advanced as relief spread through markets.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose about 0.78%, while European futures were up 1% in Asia afternoon trade.
FTSE futures climbed 0.04%.
Overnight on Wall Street, the S&P 500 gained 1.16%, its largest rise in two months, with futures adding a further 0.16% in Asian hours.
The Dow Jones Industrial Average rose 1.21%, and the Nasdaq Composite advanced 1.18%.
Currency markets reflected the shift in sentiment.
The dollar firmed, pushing the euro back below $1.17 to $1.1686.
The VIX index, often referred to as Wall Street’s fear gauge, fell sharply toward baseline levels.
US Treasuries, which had been sold earlier in the week, caught a bid, with benchmark 10-year yields flat in Tokyo after falling four basis points in New York.
“The market has largely removed the tail risk of a US confrontation with its NATO partners – not that conflict was ever truly priced into the distribution, but some would have hedged against the risk,” said Pepperstone analyst Chris Weston.
Gold retreats as safe-haven demand eases
Gold and other precious metals fell as geopolitical risk premiums unwound and the stronger dollar weighed on prices.
Spot gold declined 0.8% to $4,796.75 an ounce, after hitting a record high of $4,887.82 in the prior session.
US gold futures for February delivery also lost 0.8% to $4,799.90.
“Reversal of comments by the US President was one factor that eased geopolitical tensions, and so we see a retracement in prices,” said ANZ commodity strategist Soni Kumari.
Spot silver slipped 0.1% to $93.19 an ounce, after a recent record high. Platinum dropped nearly 2% to $2,433.50, while palladium fell 0.6% to $1,829.29.
Despite the pullback, some investors remain cautious about exiting defensive positions. “Our mood here is it’s been fabulous fun being a gold bull for the last year and a half,” said Argonaut’s Damian Rooney, adding, “and with gold you never throw the baby out with the bathwater because (Trump) can’t help himself doing or saying some crazy things, whether he’s going to carry through or not.”
South Korean market hits new milestone
South Korea’s Kospi index surged past the 5,000 mark for the first time, rising nearly 2% as investors welcomed the easing of trade and geopolitical tensions.
The small-cap Kosdaq gained 1.73%.
Battery maker Samsung SDI jumped 15.28%, Doosan climbed 8.61%, and Samsung Electronics rose 3.95%.
The rally came despite weak economic data showing South Korea’s economy contracted 0.3% quarter-on-quarter in the October-to-December period, its sharpest decline since 2022.
Full-year growth slowed to 1%, the weakest since 2020.
Japan exports miss estimates, risks persist
Japan’s Nikkei 225 rose about 1.9%, snapping a five-day losing streak, while the Topix gained 0.88%.
However, economic data showed exports growth in December rose 5.1% year on year, missing Reuters estimates of 6.1%.
Exports to the US fell 11.1%, while shipments to China rose 5.6% and exports to Hong Kong surged 31.1%.
For the full year, Japan’s exports grew 3.1%, down from 6.2% in 2024. “Although shipments are holding up for now, the outlook is fraught with risks,” said Stefan Angrick, head of Japan at Moody’s Analytics, citing higher US import levies, competition, and rising trade tensions with China.
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