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A day after markets melted down on tariff threats, they’re bouncing back big.
The Dow is up 507. The S&P 500 is up 76. The SPDR S&P 500 ETF (SPY) is up $7.40. The Nasdaq is up about 290. All after President Trump ruled out any military action on Greenland.
“I won’t do that,” Trump said during his speech in Davos, Switzerland, as quoted by CNBC. “Now everyone’s saying, ‘Oh, good, People thought I would use force. I don’t have to use force. I don’t want to use force. I won’t use force.”
The VIX also dropped about 13% on the news.
However, tariffs appear to still be on the table. Not helping, Europe just suspended the trade deal that the EU and US agreed to back in July.
“European Parliament member Bernd Lange, and INTA chair on EU-US trade relations, said the recent plans by President Donald Trump to impose tariffs of between 10% to 25% on European nations go against the terms of the trade pact,” added CNBC.
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Investors may want to keep an eye on natural gas stocks, like UNG, as the U.S. prepares for an Arctic cold blast. Just today, natural gas prices were up 20% on the news.
As a result, heating demand is expected to spike as wind chills could fall to -50 degrees Fahrenheit across the Upper Midwest and Northern Plains, according to the National Weather Service, as noted by CNBC. “The wind chills pose a life-threatening risk of hypothermia and frostbite to exposed skin, the NWS warned. Power outages could prolong the risk, the federal agency said. Families should protect all pets from the cold.”
At the moment, the UNG stock is up 11% in premarket.
After yesterday’s ridiculous pullback, the major indices are gearing up for another down day.
All thanks to potential tariffs on European countries that are opposed to the U.S. takeover of Greenland. At the moment, the S&P 500 is down about 0.11%. The SPDR S&P 500 ETF (SPY) is down about 0.18%. The Dow is down another 0.28%, as the Nasdaq dips about 0.2%.
Remember, “Trump said he would slap tariffs on imports from eight NATO members, including France and the United Kingdom, in retaliation for moving troops to Greenland. The new tariffs will start at 10% next month and increase to 25% in June,” as noted by CNBC.
Crisis will create opportunity
However, as bad as things may appear, the crisis may soon give way to opportunity.
“If you’re a medium to longer term investor, probably this is a pretty healthy buying opportunity, because the tailwinds of this economy are completely unaffected by the goings on of the past weekend,” said Scott Ladner, investment chief at Horizon, as quoted by CNBC.
Look at Europe.
Unsurprisingly, shares of luxury and beverage companies tied closely to European exports pulled back. LVMH, which owns iconic brands such as Moët & Chandon, Dom Pérignon, and Veuve Clicquot, dropped roughly $7.50 on the news.
However, such pullbacks are temporary.
Global demand for spirits, luxury goods, and European brands is still strong. If — as many expect — the tariff standoff proves temporary, today’s weakness could represent a buy-the-dip opportunity for patient, long-term investors.
Moving forward, not only can investors potentially profit from a recovery in spirits stocks, but also European exchange-traded funds that are seeing declines, such as the Vanguard FTSE Europe ETF (VGK).
With an expense ratio of 0.06%, the VGK ETF tracks the FTSE Developed Europe All Cap Index, which measures the investment return of stocks located in the major markets of Europe, including Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom.
Gold Just Broke Records
With the tariff threats, gold is now up to $4,873 and rocketing higher on the latest Greenland issue. Other factors for gold’s rise include expectations of more interest rate cuts, central banks adding tonnes of gold to their reserves, and strong inflows into exchange-traded funds.
With $5,000 gold now a strong possibility, some are now calling for $7,000. That includes analysts at ICBC Standard, which says gold could rally to $7,150. Goldman Sachs also said, “Gold remains our highest conviction long or base case, the price by the end of this year is $4,900,” as quoted by CNBC.
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