Geopolitical and Tariff Risk Back with a Bang for Markets

• As US President Donald Trump kicks off the second year of his second term in office, the geopolitical- and tariff-related volatility that characterised his return to power has resurfaced to shake markets. Investors who have been conditioned to asset prices swiftly rebounding are worried that this time there could be more lasting damage.
• Volatility measures across asset classes rose while stocks, U.S. long-dated ‌Treasuries, and the ‌U.S. dollar sold off on Tuesday, January 20, 2026, a day after Trump threatened to rekindle a trade war with Europe over the U.S. administration's aim to take over Greenland, threatening to blow apart the political and military alliance that has underpinned Western security for decades.
• The threats have revived talk of the Sell America trade that emerged following last year's "Liberation Day" tariff announcement in April 2025, with investors shying away from U.S. assets. For Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia, the market action was reminiscent of last year where the market peaked in late January 2025, early February 2025, then, as the tariff news hit the headlines, the market had a pretty good correction.
• While Trump has shown flexibility on tariffs when markets come under severe pressure, investors worry it might take significantly more volatility before the situation over Greenland is resolved. Indeed, the selloff concerned investors because it ‍was spread across multiple assets.

(Source: Reuters)