Greenland Rhetoric Triggers Selloff as Investors Cut Risk Exposure

GLOBAL MOOD: Risk-Off
Drivers: Greenland sovereignty push, NATO unity concerns, Trade war risk

Global markets moved decisively into risk-off territory as escalating tariff threats linked to President Donald Trump’s push for control of Greenland rattled investor confidence.

Asia-Pacific equities fell, tracking sharp losses on Wall Street, as fears of a renewed transatlantic trade war resurfaced. Trump’s warnings of steep tariffs on multiple European countries, alongside threats targeting French exports, heightened concerns over retaliation and policy unpredictability.

High-beta technology stocks bore the brunt of selling, while safe-haven demand lifted Treasuries even as yields stayed volatile. Cooling labour market signals in the US and UK added to caution, reinforcing a defensive tone amid rising geopolitical and trade risks. 

TODAY’S WATCHLIST
 - Trump’s speech at Davos WEF
 - ECB President Lagarde Speech
 - Oct-Dec Earnings: Eternal, Dr Reddy’s, HPCL, Bank of India,

THE BIG STORY
President Donald Trump doubled down Tuesday on his bid to seize Greenland from Denmark, declaring "no going back" and refusing to rule out force, while lashing NATO allies and posting AI mock-ups of US control over the strategic Arctic island, threatening to fracture the alliance and reignite a transatlantic trade war. His Treasury Secretary Scott Bessent dismissed market "hysteria" at Davos, even as French President Emmanuel Macron fired back, vowing Europe won't bow to "bullies" amid threats of steep tariffs on French wine if Greenland isn't surrendered. Markets jittered on the escalation, with European stocks dipping and safe-haven flows lifting Treasuries.

Trump softened slightly ahead of the World Economic Forum, telling reporters "we will work something out" to make NATO "very happy," after a call with Secretary General Mark Rutte. Yet his Truth Social insistence that "Greenland is imperative for National and World Security" underscores the high stakes, as European leaders scramble, Macron swinging hardest while investors brace for tariff fallout echoing last year's disruptions.

Data Spotlight
The US private employers added an average of 8,000 jobs per week in the four weeks ending December 27, 2025, according to ADP Research, down from 11,250 in the prior period. While this marked a sixth consecutive period of job gains, the pace of hiring moderated toward year-end, with the final week of 2025 showing a noticeable slowdown. The data reinforces the narrative of a low-hire, low-fire labour market, where firms remain cautious amid policy uncertainty and slowing demand.

The UK unemployment rate held steady at 5.1% in the three months to November 2025, slightly above expectations of 5.0% and the highest level since early 2021. Total unemployment rose by 103,000 to 1.84 million, driven by increases across all durations of joblessness, including short-term and long-term unemployment. The figures highlight persistent slack in the UK labour market despite easing inflation pressures.

Takeaway: Labour market data across the US and UK point to cooling employment momentum rather than outright weakness, supporting expectations of policy caution from central banks while keeping rate-cut prospects alive later in the year.

WHAT HAPPENED OVERNIGHT

• US stocks slide as tariff fears spark risk-off move
  • US stocks indices recorded their biggest one-day declines in three months, with the S&P 500 down 1.9%, the Dow falling 1.7%, and the Nasdaq sliding 1.9%.
  • Losses followed President Donald Trump’s threat to impose tariffs starting at 10% and increasing to 25% by June on eight European countries, in response to opposition to US control of Greenland.
  • High-beta names bore the brunt, with Nvidia (-4.4%), Broadcom (-5.4%), and Oracle (-5.8%) sliding sharply as investors cut exposure to AI and semiconductor stocks.
  • Cyclicals and industrials declined, with 3M down 7% on weak guidance despite higher revenue, and Netflix losing 1.1% amid reports of a cash bid for Paramount.

• US Treasury yields surge on global bond selloff, tariff threats
  • The benchmark US 10-year Treasury yield jumped around 7bps to 4.29%, the highest level since August, as global bond markets sold off after the long weekend.
  • President Donald Trump said eight European allies would face tariffs starting at 10% on February 1 and rising to 25% by June 1 unless the US is allowed to acquire Greenland.
  • Trump also threatened 200% tariffs on French wine and champagne after President Emmanuel Macron declined to join his proposed “Board of Peace,” adding to inflation and rate-risk concerns.

• US Dollar slides on Greenland tensions, risk aversion
  • The US dollar indexslipped below 98.5, nearly unwinding its year-to-date rebound as geopolitical uncertainty weighed on sentiment.
  • The dollar fell in over a month, with the dollar index down as much as 0.7%, the steepest drop since mid-December.
  • Escalating White House threats toward Europe over Greenland rattled confidence in US assets and sparked a broad selloff in US stocks and government bonds.

• Crude oil prices rise on supply disruption, growth optimism
  • Brent crude prices settled up 1.53% at $64.92/barrel; WTI (Feb) rose 1.51% to $60.34/barrel.
  • Temporary suspension of output at Kazakhstan’s oil fields tightened near-term supply.
  • Expectations of firmer global economic growth supported fuel demand prospects.
  • Markets continued to monitor US tariff threats against European states over Greenland.

Day’s Ledger

Economic Data

• India M3 Money Supply

Corporate Actions

• Oct-Dec Earnings: Eternal, Dr Reddy’s, HPCL, Bank of India, Waaree Energies, Oracle Financial, Jindal Stainless, Tata Communications, Supreme Industries, Dalmia Bharat, KEI Industries, PNB Housing, Anant Raj, UTI AMC, Vardhman Textiles, Gravita India
• 5Paisa Capital board to mull fund raising 

Policy Events

• ECB President Lagarde Speech
• BoE Woods Speech

Tickers to Watch

• Have sufficient pilots so no cancellations after Feb 10: IndiGo to DGCA
• Sunteck Realty buys two-acre Andheri East land with ₹2,500 crore GDV
• Walmart-backed payments major PhonePe gets Sebi approval for IPO
• More gains for Hindustan Zinc dependent on volume, LME price trajectory
• Persistent Systems Q3 results: Net profit rises 17.8% to ₹439 crore
• United Spirits Q3FY26 results: Net profit rises 25% to ₹418 crore
• TBZ posts two-fold jump in Q3 profit to ₹81 crore; income up by 15%
• AU Small Finance Bank Q3FY26 results: Net profit up 26% at ₹668 crore
• J-K Bank reports 11% growth in Q3 net profit to ₹589 crore, gross NPA at 3%
• PowerGrid to procure reactors, transformers worth ₹914 crore

Must Read

• After GST relief, insurers seek higher income tax benefits in Budget 2026
• Core sector growth slows to 3.7% in December on lower oil, gas output
• India's oil bill plunges 8.5% in December amid falling crude prices
• Ficci's manufacturing index reaches an all-time high in Q3 of FY26
• India Inc likely to post 6% revenue growth in FY27: Fitch Ratings
• Budget 2026-27: Mutual fund industry seeks capital gains relief
• Supreme Court Will Decide if Fed Independence Has Any Legal Teeth

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See you tomorrow with another edition of The Morning Edge.

Have a great trading day.

The 60:40 Reality

States today account for around 60% of total public expenditure in India, while the Centre accounts for the remaining 40%. On the revenue side, the picture is reversed: the Centre raises about 60% of combined revenue, while the states collectively raise around 40%. This asymmetry now sits at the heart of India’s fiscal and macroeconomic story.

Former RBI Governor Duvvuri Subbarao writes, this 60:40 reality means India’s macroeconomic outcomes can no longer be read through the Union Budget alone. Growth, borrowing costs and stability will increasingly depend on how state finances are managed—how they spend, how transparently they borrow, and how closely fiscal choices are coordinated across levels of government.