The FTSE 100 was sharply higher on Thursday after Donald Trump made a U-turn on his Greenland threats and adopted a more diplomatic approach.
Donald Trump is famous for changing his mind and not following through on threats, but that does not make events at Davos yesterday any less dramatic.
London’s leading index rose 0.7% to trade back above 10,200 after the US President signaled he wouldn’t pursue a military invasion of Greenland, and a framework emerged for the US to be given a small pocket of the country to build military bases.
This could be seen as a win for all involved, and equity markets cheered the end of short but deeply concerning tensions between the US and some of its closest allies.
“Donald Trump’s TACO bell has rung once again, much to the joy of financial markets,” said Russ Mould, investment director at AJ Bell.
“Trump has form in chickening out of his threats, and investors are pleased he confirmed no plans to use military action to take Greenland or to impose new tariffs on parts of Europe.
US markets reacted well to developments overnight, and the improvement in sentiment spilt into the European session. The S&P 500 closed over 1% higher at 6,875.
The FTSE 100’s leaderboard was turned on its head on Thursday when compared to the week’s earlier sessions. Defensive sectors were out of favour, and investors were prepared to take a little more risk with cyclical sectors.
Falling geopolitical tensions weighed on precious metals, which saw Endeavour Mining and Fresnillo – two stocks that thrive on uncertainty – at the bottom of the leaderboard, with losses of around 2%. Diversified miners Rio Tinto and Antofagasta were also among the losers after a frenetic start to 2026.
Defence stocks BAE Systems and Babcock were down around 1%.
The positive impact of JD Sports’ trading update yesterday continued into a second session with the stock rising to 84p.
St James’s Place was the top riser after analysts at JPMorgan marginally increased their price target on the stock. FTSE 100 banks NatWest, Lloyds, and Barclays played a part in Thursday’s rally with gains between 1.7% and 2.6%.
IMI and Rentokil were among several stocks continued steady uptrends breaking to their highest levels of the year so far.