European Midday Briefing : Shares Rebound After Trump Backtracks on Tariffs

MARKET WRAPS

Stocks:

European shares advanced as calm returned to global markets Thursday following a de-escalation in Greenland tensions.

Trump canceled tariffs against European nations opposing his plan to acquire Greenland and ruled out taking the territory by force. He also announced a framework for a future deal on Greenland with NATO.

Government bond markets stabilized. Gold slipped.

Julius Baer said investors appeared comfortable re-engaging with risk as the probability of near-term escalation of geopolitical tensions diminished.

Commerzbank, however, said details of the framework aren't known and even if a deal is reached there's no guarantee the U.S. won't find another issue with Europe .

Corpay said the developments should ease short-term volatility but added the episode had "nonetheless reminded investors of the erratic nature of the current U.S. policy regime ."

German Chancellor Friedrich Merz's appearance is among the highlights at Davos today .

Stocks on the Move

Defense stocks continued to fall after Trump's Greenland statements. Fincantieri, Saab, Rheinmetall and Leonardo were among the fallers.

Economic Insight

U.K. finances are becoming more stable, MHA said following data showing that government borrowing had fallen for the third straight month .

Pantheon said the public finances risked worsening due to rising political pressures ahead of local elections in May.

U.S. Markets:

Nasdaq contracts led premarket gains and the Treasury market was stable after Trump's Greenland pivot.

Wednesday's rebound on Wall Street was broad-based, with all 11 sectors ending higher, led by tariff-exposed industries that had borne the brunt of recent volatility.

Attention now turns to PCE inflation data for cues on the Federal Reserve's rate-cut path.

Forex:

The dollar stabilized following recent losses.

Commerzbank said the Greenland episode could strengthen Europe's efforts to become more independent of the U.S and encourage the region to decouple itself more strongly from the dollar.

Bonds:

Medium- and long-term Treasury yields edged higher in Asian afternoon trade.The market was looking calmer overall following Trump's Davos speech.

Eurozone government bond yields were steady to marginally lower in opening trade. Supply slows after massive issuance by numerous sovereigns this week.

The 10-year JGB yield was down .

Barclays said the bond market had found some calm amid expectations that Tokyo may introduce policy measures in response to the recent surge in yields.

It said possible measures could include increases in the Bank of Japan's JGB purchases and adjustments to debt issuance or bond buybacks.

Focus shifts to communication at the Bank of Japan's meeting ending Friday.

Energy:

Oil prices edged lower in early trading on easing geopolitical tensions.

Meanwhile, the International Energy Agency reiterated its expectation of a significant supply glut this year, but raised its oil-demand growth expectations.

Gas

European natural-gas prices briefly climbed above 40 euros a megawatt-hour-- their highest level since June --driven by concerns over rising heating demand and a record rally in U.S. prices.

Metals:

Gold prices slipped after Trump's Greenland comments eased some of the geopolitical concerns that had fueled bullion's rally.

Goldman Sachs raised its December 2026 forecast for gold to $5,400/oz from $4,900/oz previously.

Copper

Prices gained, likely due to signs of tightness in the base metal. ANZ Research said concerns around tightness are unlikely to be eased by continuing supply-side issues.

Iron ore

Prices edged lower in early Asian trading.

Positives had largely been priced in , Nanhua Futures said. Overall, supply and demand conditions remained relatively healthy.

EMEA HEADLINES

Bouygues, Orange, Free-iliad In Talks With Altice for French Telecoms Business

France's Bouygues, Orange and Free-iliad Group said they are in talks with Altice Group, owned by billionaire Patrick Drahi, for a potential acquisition of most of its French telecommunications operations.

The talks come after Altice in October rejected a joint nonbinding offer from the three companies to acquire a large part of its business for 17 billion euros ($19.87 billion).

Volkswagen Forms New Management Structure to Oversee Group's Core Brands

Volkswagen formed a new management board that will oversee decision-making across the group's core brands that could unlock around $1.2 billion in production savings alone.

The new cross-brand steering model, which will oversee the Volkswagen, Skoda, Seat/Cupra and VW commercial vehicle brands, will create a more competitive organization through the streamlining of processes and structures that will yield efficiencies, it said on Wednesday.

EQT to Acquire Private Equity Firm Coller Capital For Up to $3.7 Billion

STOCKHOLM-EQT agreed to acquire U.K.-based private-equity firm Coller Capital for up to $3.7 billion.

The Swedish buyout group said Thursday it would pay a base consideration of $3.2 billion, funded through newly issued EQT ordinary shares, and up to $500 million contingent on certain performance milestones to be funded in cash.

Zurich Insurance's $10.3 Billion Beazley Offer Rejected

Cyber insurer Beazley said it turned down a fifth takeover offer from Switzerland's Zurich Insurance that values the U.K. company at 7.67 billion pounds ($10.30 billion).

The board of the London-listed company unanimously rejected the most recent cash bid put forward by its larger peer, which it says materially undervalues Beazley and its long-term prospects.

Societe Generale to Trim French Workforce

Societe Generale said it intends to cut around 1,800 jobs in France as part of an effort to keep a lid on costs.

The French bank said the roles affected include those at its headquarters and its retail banking division's regional organization, though its branch network isn't affected.

GLOBAL NEWS

Global Markets, U.S. Futures Rally on Trump Tariff U-Turn

Global markets and U.S. futures rallied after President Trump back-tracked on threats to hit eight European countries with 10% tariffs in February. In a Truth Social post, Trump said that he agreed "the framework of a future deal" over Greenland with NATO Secretary-General Mark Rutte. After jumping sharply Wednesday, U.S. equities continued to rally premarket, following broad gains in Asia and a strong European open.

Across the globe, the market picture looked closer to last Friday's close. Safe-haven precious metals fell back, while oil gained. U.S. Treasurys and the dollar stabilized following Trump's speech at Davos and subsequent tariff pivot. Sentiment was also improved by easing pressure on Japanese Government Bonds amid anticipation of policy intervention in Tokyo to soothe investor fears over soaring yields.

Supreme Court Balks at Trump's Push to Control the Fed

WASHINGTON-Supreme Court justices across the ideological spectrum expressed deep unease on Wednesday about President Trump's attempt to fire a member of the Federal Reserve, with several stressing the importance of a central bank insulated from political pressure.

Their comments during nearly two hours of oral arguments signaled that the court will likely allow Fed board member Lisa Cook to remain in the job while her legal challenge to her dismissal proceeds in the lower courts.

U.K. Government Borrowing Falls For Third Straight Month

The U.K. government borrowed less in December than a year earlier, a third straight month of decline that indicates it has started to contain a rise in debts following a series of tax increases.

The Office for National Statistics on Thursday said the government borrowed 11.6 billion pounds ($15.58 billion) in December, down 7.1 billion pounds from a year earlier. That brought the total for the first nine months of the fiscal year to 140.4 billion pounds, slightly lower than in the same period in the previous year.

Norway's Central Bank Still in No Rush to Lower Borrowing Costs Further

Norway's central bank still expects to take a gradual approach to monetary policy easing as it held its key rate at 4% for the third straight meeting.

The decision was in line with a Wall Street Journal poll.

The Chinese Spy Machine Infiltrating Taiwan's Military

TAIPEI-Sgt. Lai Chung-yu had almost everything a Chinese spy recruiter could want in a Taiwanese asset.

As a member of the military police battalion tasked with guarding the offices of the president and many senior officials, he knew the security personnel and measures used to protect them.

In Greenland, Anxiety Over U.S. Ambitions Puts Normal Life on Pause

NUUK, Greenland-As President Trump spoke Wednesday, Rikke Østergaard was anxiously refreshing news coverage at her desk, trying to understand whether the president had categorically ruled out an invasion.

"My nerves are in flight or fight...I try to calm myself down, take it easy, take it easy, but it's difficult," said Østergaard, a Ph.D. student at the University of Greenland.

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This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

01-22-26 0517ET