Global shares rebounded on Wednesday from a selloff the previous session after President Donald Trump said a framework on a future deal over Greenland has been reached, according to Reuters.
Trump, who is attending the World Economic Forum in Davos, said the U.S. will no longer be imposing tariffs that had been scheduled to take effect from February 1. He had ruled out taking Greenland by force in an earlier speech, which also helped to calm investor nerves.
Wall Street stocks jumped following Trump's comments on a Greenland framework. The Dow Jones Industrial Average (.DJI), opens new tab rose 1.54%, the S&P 500 (.SPX), opens new tab gained 1.51% and the Nasdaq Composite (.IXIC), opens new tab added 1.66%.
"The market bounced when he said we wouldn't use force," said Mark Hackett, chief market strategist at Nationwide in Boston. "Following the events of last April, investors are catching on that his negotiating style is very different than past administrations, so uncertainty is a natural outcome."
MSCI's All-World index (.MIWD00000PUS), opens new tab was up 0.87%, after losing ground in the last session, while Europe's STOXX 600 index (.STOXX), opens new tab finished a touch lower by 0.02%. Britain's FTSE index (.FTSE), opens new tab added 0.11%.
The VIX index (.VIX), opens new tab, which measures demand for protection against big swings in the S&P 500, dropped more than 15% to 16.90, a day after jumping to its highest since November. The index is often used as a proxy for investor nervousness and, for many, 20 is the point above which market volatility can suddenly explode.
The European Parliament decided to suspend its work on a trade deal between the 27-member bloc and the U.S., a parliament member said, following Trump's repeated requests to take control over Greenland. The European Union will convene an emergency summit in Brussels on Thursday to discuss the matter, with the long-standing U.S.-EU alliance at risk.
"You had the Venezuelan thing, you had Greenland and you had Iran and none of these things seemed to be making a huge dent," said James St. Aubin, chief investment officer at Ocean Park Asset Management in Santa Monica, California.
"Obviously we had a pretty significant selloff yesterday but in the grand scheme of things it seems the market should have a hard time making new highs and yet it continues to brush off some of these very provocative ideas that Trump likes to throw around."
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