US sharemarkets staged a sharp rebound on Wednesday after President Donald Trump said he would not use force to acquire Greenland and later confirmed that a framework agreement had been reached, prompting him to call off planned tariffs on Europe.
Stocks were already higher earlier in the session following Trump’s comments at the World Economic Forum in Davos, where he played down military action. Gains accelerated in afternoon trade after the tariff halt was announced, reversing the previous session’s heavy losses.
The Dow Jones Industrial Average jumped 588 points, or 1.2%, to 49,007. The S&P 500 rose 1.2% to 6,875, while the Nasdaq Composite added 1.2% to 23,224. Despite the rally, all three major indexes remain lower for the week, with losses of around 0.6% for the Dow and roughly 1% for the S&P 500 and Nasdaq.
“Sell America” trade unwinds
The relief rally triggered a reversal of the so-called “sell America” trade that had dominated markets on Tuesday. US Treasury prices rose, pushing yields lower, while the US dollar regained ground after a sharp pullback earlier in the week.
Gold, which had surged to a fresh record above US$4,800 an ounce during the height of the uncertainty, pared its gains as risk appetite returned. Bitcoin also rebounded alongside equities.
Tuesday’s sell-off had been marked by rising Treasury yields, a weaker dollar, and the worst daily equity losses since October, after Trump escalated tariff threats tied to Greenland and declined to rule out military options.
Tech and banks lead rebound
Technology stocks led the recovery as investors moved back into growth names after several days of defensive positioning. Semiconductor stocks were among the strongest performers.
Bank shares also advanced after Trump reiterated plans to pursue a cap on credit card interest rates, though prospects for congressional approval remain uncertain. Financial stocks broadly outperformed the market.
US Treasury Secretary Scott Bessent said the administration was not concerned about the prior session’s market volatility.
Fed independence in focus
In Washington, attention also turned to the Federal Reserve, after Supreme Court justices expressed scepticism over whether the president has the authority to dismiss a sitting Fed governor. The discussion raised renewed questions about central bank independence, adding another layer of political risk for investors.
ASX set to open higher
Australian shares are set to open sharply higher after futures reversed earlier losses. ASX 200 futures are pointing up 47 points, or 0.5%, to 8,795.
Local attention will turn to December employment data at 11.30am. NAB expects the unemployment rate to hold steady at 4.3%, with the economy adding around 40,000 jobs.
Among companies reporting quarterly updates today are Fortescue, Insignia Financial, Northern Star Resources, Regis Resources, Resolute Mining, South32, Sandfire Resources and Santos.
