LONDON — European stocks were set for a sharp relief rally Thursday. The bounce came after U.S. President Donald Trump ruled out using force to take Greenland and backed away from tariff threats against European allies tied to the dispute, Jan. 22, 2026.
Futures on European stocks pointed higher in early trading, with broad European contracts up about 1.2% and FTSE futures up 0.75%, according to a Reuters markets wrap. Gold slipped about $100 an ounce from a record high to around $4,790, while the euro eased back below $1.17 as the dollar steadied.
European stocks react: relief rally after Trump rules out force
Trump, speaking at the World Economic Forum in Davos, said he would not use force — “I won’t do that” — after days of rhetoric that had jolted stocks, bonds and currencies. He later posted on Truth Social that the United States and NATO had a framework for cooperation around Greenland and that he would not impose the threatened tariffs, a shift traders said reduced the worst-case scenario hanging over European stocks.
NATO Secretary-General Mark Rutte said the question of whether Greenland stays with Denmark did not come up in his conversation with Trump, according to Reuters, underscoring how little detail has been made public so far.
The diplomatic picture is still fluid. EU lawmakers on Wednesday suspended work on a pending EU-U.S. trade package — including proposals to cut duties and keep zero tariffs on U.S. lobster imports — saying the new tariff threats broke the spirit of an agreement struck in Turnberry, Scotland, last July.
KOSPI tops 5,000, Aussie jumps, gold eases
In Asia, South Korea’s benchmark KOSPI surged above 5,000 for the first time, helped by gains in chipmakers and optimism that governance reforms are finally narrowing the long-running “Korea discount,” shorthand for local shares often trading at lower valuations than global peers. The Business Times reported the index rose about 2% to roughly 5,009 in early trading, adding to a strong start to 2026.
Currency markets echoed the shift back toward risk. The Australian dollar climbed to a 15-month high near 68 U.S. cents after Australian Bureau of Statistics data showed unemployment fell to 4.1% in December and employment rose by about 65,000. Traders increased bets for a February rate move by the Reserve Bank of Australia, while gold’s pullback signaled a cooling of immediate fear.
A familiar Greenland headline, a familiar market reflex
For European stocks, the swing underscored how quickly geopolitics can overwhelm earnings and economic data. Trump’s interest in Greenland is not new: In August 2019, he canceled a Denmark visit after the prime minister rejected discussion of a U.S. purchase of the island.
The KOSPI milestone also comes with history. South Korea first first cracked the 3,000 level in early 2021 after a steep post-pandemic rally; clearing 5,000 just over five years later highlights how the AI-driven chip cycle has reshaped the region’s equity leadership, as reported by Reuters at the time.
Investors in European stocks will be watching for how long the calmer tone lasts. The week’s volatility is a reminder that policy signals — not just central-bank decisions — can drive sharp, fast moves, and European stocks may demand clearer details before declaring the Greenland dispute truly over.
