Trump's Greenland Gambit Stirs European Markets, Relief as Rhetoric Softens

European shares rebounded to close flat after President Trump eased his Greenland acquisition rhetoric. Earlier tariffs threats against Europe had caused market sell-offs. Mining and chemicals rose as cautious optimism returned. Focus shifts to domestic markets and AI-driven sectors. Quarterly earnings are expected to drop significantly.

European shares pared earlier losses and steadied on Wednesday, after U.S. President Donald Trump softened his acquisition push for Greenland. The pan-European STOXX 600 closed flat, having rebounded from a near 1% drop earlier in the trading session.

Trump's initial threats to impose escalating tariffs on eight European countries over the potential Greenland purchase sparked a severe sell-off in global markets, with the STOXX 600 down nearly 3% at one point. However, his assurance at the World Economic Forum in Davos that force would not be used to acquire the territory brought some relief to investors.

Despite the easing tensions, market caution remained evident as precious metals gained. Mining stocks rose 3.7% and chemicals saw a 1.7% boost. European investors are pivoting towards domestically focused sectors like banks and renewables, anticipating them to lead 2026's market winners.