Davos relief
César Pérez Ruiz, Chief Investments Officer Pictet Wealth Management.
US President Donald Trump agreed to the “framework of a future deal” over Greenland at the Davos forum and backed down from a threat to impose fresh tariffs on European countries over the Danish territory. The prospect of a deal eased some market tensions in a fraught week, during which Trump threatened to hit French wines and champagnes with 200% tariffs, pressing President Emmanuel Macron to join his Board of Peace initiative aimed at resolving conflicts.
Amid geopolitical uncertainty over Greenland and the future of the NATO alliance, gold had its best week since 2008, closing the week at USD 4987 per ounce. Silver closed above USD 100 for the first time ever. The US dollar lost 1.7% during the week, the euro and Swiss franc gained 2% and 3% respectively.
The S&P 500 [1] fell 0.3% (in USD). In Japan, Prime Minister Sanae Takaichi’s proposal to suspend a consumption tax on food accelerated a sell-off in Japanese government bonds (JGBs) as investors questioned the government’s fiscal discipline. The yield on 40-year JGBs rose above 4% for the first time since their launch in 2007.>/p>
Quote of the week
“We are in the midst of a rupture, not a transition,” Canadian Prime Minister Mark Carney said in a speech on the world order at Davos.
Key data
The US personal consumption expenditures (PCE) price index, a measure the Federal Reserve uses as its main forecasting tool, showed annual inflation at 2.8% in November, both for the headline and core measures.
The euro area Flash Composite purchasing managers’ index (PMI) was unchanged at 51.5 in January, slightly below expectations.
China’s economy grew 4.5% in the fourth quarter, in line with expectations, and 5.0% in the full-year 2025. Japan’s economy shrank at a stronger-than-expected annualised rate of 2.3% in the third quarter, pointing to a stagflationary environment.
[1] Source: Pictet WM AA&MR, Thomson Reuters. Past performance, S&P 500 Composite (net 12-month return in USD): 2021, 28.7%; 2022, -18.1%; 2023, 26.3%; 2024, 25%; 2025, 17.9%.
