FRANKFURT (dpa-AFX) - Following relief over Donald Trump's reversal on Greenland, the momentum of Thursday's recovery is noticeably slowing on Friday. The DAX was quoted by broker IG at 24,894 points, up 0.15 percent, about two hours before the opening of trading. Despite Thursday's substantial rebound, this brings a nervous week to a close, during which the DAX has lost 1.6 percent so far. At the start of the week, U.S. President Trump delivered another tariff shock to the markets.
"Stay calm, hedge, and carry on," is the morning recommendation from Barclays analyst Emmanuel Cau. The swift de-escalation of the Greenland crisis suggests that the Trump administration has little tolerance for a stressed market situation. Once again, it is clear that they remain acutely aware of equity investors' pain threshold and are highly sensitive to reactions in the financial markets.
Cau continued that the initial price movement was unsurprisingly a flight from risk. The record-high equity allocation among households and their almost fully invested positions leave little room for error. However, earnings strength and interest rate stability are crucial for equities to weather geopolitical turbulence unscathed. Once again, the so-called "Taco Trade" has prevailed, where investors bet that Trump will eventually soften his stance./tih/jha/
