LONDON, Jan 22, 2026, 08:48 GMT
- European shares climbed back as President Donald Trump dropped tariff threats tied to Greenland.
- UK inflation climbed to 3.4% in December, dampening expectations for an imminent Bank of England rate cut.
- Burberry, Currys and Rio Tinto grabbed attention among London-listed stocks following new updates.
European shares bounced back in early trade Thursday following U.S. President Donald Trump’s decision to drop tariff threats over Greenland and dismiss the idea of using force to take the Danish territory. By 0802 GMT, the pan-European STOXX 600 had climbed 1%. 1
After a tough run for risk assets, markets found some relief. The FTSE 100 in London dropped 0.72% Tuesday following President Trump’s threat to slap an extra 10% tariff on imports from eight European nations, Britain included, starting Feb. 1—unless the U.S. gets the green light to buy Greenland. “Geopolitical tensions have dented sentiment,” noted Laura Cooper, senior macro strategist at Nuveen. 2
Investors in Britain are adjusting their expectations for rate cuts after inflation came in higher than forecast. Official data showed the headline CPI rose 3.4% in the year to December, while CPIH, which factors in owner-occupiers’ housing costs, climbed 3.6%. Morgan Stanley moved its forecast for the Bank of England’s next rate cut from February to March. Traders now price in about 42 basis points of cuts by the end of 2026, with a basis point equal to 0.01 percentage point. 3
After meeting NATO Secretary General Mark Rutte, Trump announced that Western Arctic allies had agreed on a framework for Greenland’s future. He confirmed he would not go ahead with the tariffs set for Feb. 1. “It’s a deal that everybody’s very happy with,” he told reporters, later adding, “It’s a deal that’s forever.” Denmark’s Foreign Minister Lars Lokke Rasmussen emphasized the importance of ending the issue with “respect for the integrity and sovereignty” of Denmark and the Greenlanders’ right to self-determination. 4
Britain’s finance minister Rachel Reeves adopted a cautious stance in Davos yesterday, emphasizing the UK’s preference for de-escalation and the benefits of reducing trade barriers for British firms. “We will work always … to bring barriers down, not to up the rhetoric to get a cheap headline,” Reeves said. She expressed confidence that last year’s UK-U.S. economic deal would hold, referencing U.S. Commerce Secretary Howard Lutnick’s remarks that there was no reason to dismantle existing trade agreements. 5
The Greenland dispute has fed tensions in other hotspots between Washington and London. Trump slammed Britain’s move to hand over sovereignty of the Chagos Archipelago to Mauritius as “total weakness” and “great stupidity.” British officials pushed back, saying his comments overlooked the national-security reasons for maintaining the U.S.-UK base on Diego Garcia under a long-term lease. 6
France’s President Emmanuel Macron pushed back firmly, insisting Europe won’t be bullied. “We do prefer respect to bullies,” he said, responding to Trump’s threat of 200% tariffs on French wines and champagnes. EU leaders are now gearing up to discuss hitting back, possibly by reactivating tariffs on 93 billion euros of U.S. goods as soon as next month. 7
UK labour market figures have thrown new complexity at the question of whether inflation will ease naturally. The jobless rate climbed to 5.1% in the September-to-November period. Meanwhile, HMRC payroll data showed a drop of 33,000 payrolled employees from October to November. Job vacancies ticked up slightly to 734,000. (Payrolled employees are those recorded via PAYE tax records.) 8
A morning note from interactive investor highlighted a “risk-off” mood, with investors steering clear of riskier assets as tariff threats weighed on European stocks and boosted precious metals. It singled out French drinks companies like Remy Cointreau and LVMH, noting that rising employment costs were making firms hesitant to hire permanent staff. 9
In London, company updates at times overshadowed geopolitical concerns. Burberry reported a 3% rise in comparable store sales for the quarter ending Dec. 27. CEO Joshua Schulman attributed the growth to its “Timeless British Luxury” campaign. Currys lifted its profit forecast to about £180-190 million following a strong Christmas period. JD Wetherspoon revealed costs were £45 million above projections. Gold, often seen as a market barometer amid this week’s volatility, was trading near $4,861 an ounce in the Standard’s live coverage. 10
U.S. earnings news stirred things up overnight. Netflix reported holiday quarter revenue of $12.1 billion, slightly beating estimates, and said paid subscribers hit 325 million. Still, shares dropped more than 4% in after-hours trading, as investors zeroed in on its $82.7 billion all-cash bid for Warner Bros Discovery. “Historically, Netflix has not shied away from doing what’s right for long-term growth,” noted Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors. 11
The risk is that Thursday’s relief proves fleeting. Details about any Greenland talks are still unclear, tariff threats keep popping back, and UK inflation remains stubbornly above the Bank of England’s 2% target. It’s a volatile mix that could send markets swinging, especially with central bank decisions and corporate updates arriving in fits and starts.
