Stocks rally as Trump drops Greenland tariff threats

US President Donald Trump speaks at the "Board of Peace" meeting during the World Economic Forum (WEF) annual meeting in Davos on January 22, 2026. [AFP]

Stocks rallied Thursday after President Donald Trump rowed back on threats to hit key European countries with tariffs over their opposition to a US takeover of Greenland.

Gains were fuelled also by a surge in tech stocks as the artificial intelligence trade roared back into the spotlight after the head of top AI chipmaker Nvidia said the sector needed "trillions of dollars" more investment.

Markets had been rattled by volatility this week after the US president said he would hammer several nations -- including Germany, France, Britain and Denmark -- with levies for their pushback against his grab for the North Atlantic island.

But relief came on Wednesday when Trump backed down on threats to seize Greenland by force from ally Denmark and retracted his tariff threat, following talks with NATO Secretary-General Mark Rutte.

"We have formed the framework of a future deal with respect to Greenland," he wrote in a post on Truth Social, without providing details.

"Based upon this understanding, I will not be imposing the Tariffs that were scheduled to go into effect on February 1st," he said.

Paris and Frankfurt stock markets jumped more than one percent on Thursday, while London also traded higher nearing the half-way stage.

"The Greenland situation may have calmed down, but there are still enough unanswered questions to throw caution to the wind," said AJ Bell investment director Russ Mould.

"It's more about financial markets regaining balance than moving into top gear," he added.

The news fuelled a rally Wednesday of more than one percent in US stocks, which had tanked on Tuesday on their return from a long weekend.

Asia followed suit on Thursday, with Tokyo, Hong Kong and Shanghai each closing higher.

Advances in the region were led by tech-heavy markets Tokyo, Taipei and Seoul, with the latter topping 5,000 points for the first time as chip companies enjoyed bumper gains.

The surge came after Nvidia boss Jensen Huang told the World Economic Forum in Davos that the infrastructure to develop and power generative artificial intelligence models will require further "trillions" of dollars in investment.

He told delegates that the AI boom "has started the largest infrastructure buildout in human history".

South Korean chip leaders Samsung and SK hynix gained around two percent, while in Japan tech investment giant SoftBank piled on more than 11 percent.

European chipmakers also climbed, with shares in heavyweights ASML and STMicroelectronics both up three percent.

Trading in French video game giant Ubisoft was briefly suspended following a 33-percent fall in its share price after the firm announced it expected to make huge losses this year.