Markets were rocked this week by the US president saying he would hit several countries – including Germany, France, Britain and Denmark – with tariffs over their opposition to his seizure of Greenland, a Danish autonomous region.But relief came on Wednesday when Trump backed down on ally Denmark’s threats to take the North Atlantic island by force and withdrew his tariff threat, following talks with NATO Secretary General Mark Rutte.
“That was enough to trigger the so-called TACO trade – ‘Trump Always Chickens Out’ – and the markets responded with one of their strongest rallies in recent months,” said Fawad Razaqzada, market analyst at Forex.com.
But analysts said there was no guarantee that relations between Europe and the US had improved sustainably, a concern limiting gains.
“The situation in Greenland may have calmed down, but there are still plenty of unanswered questions,” said AJ Bell investment director Russ Mould. “It is more about regaining balance in the financial markets than about shifting into top gear.” Progress in Asia was previously led by tech-heavy markets of Tokyo, Taipei and Seoul, with the latter breaking above 5,000 points for the first time, while chip companies posted huge gains.
The increase came after Nvidia CEO Jensen Huang told the World Economic Forum in Davos that the infrastructure to develop and power generative AI models will require additional “trillions” of dollars in investment.
He told delegates that the AI boom “has ushered in the greatest infrastructure expansion in human history.”
The comments helped boost South Korean chip leaders Samsung and SK hynix, technology investment giant SoftBank of Japan and European heavyweights ASML and STMicroelectronics.
Trading in French video game giant Ubisoft was briefly suspended after its share price fell 33 percent after the “Assassin’s Creed” maker said it expects huge losses this year.
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