27 January, 2026

How Tariff Policy and Geopolitical Tensions Drive Market Volatility

# Economy & Markets

News - RC-2026.01.26 - Geopolitics-tarffs-market

Key points

Markets were highly volatile following President Trump’s threats to impose tariffs on several NATO members unless the US was allowed to purchase Greenland. Equities dropped sharply early in the week, with the Stoxx Europe 600 and S&P 500 both seeing significant declines, and volatility spiked. Sentiment improved after Trump ruled out military action and abandoned the tariff threat, leading to a relief rally. Japanese government bond yields rose, as doubts about fiscal trajectories remain a key risk to monitor. Gold remains the main beneficiary of geopolitical uncertainty and debt concerns, reaching new record highs.
Tensions have eased for now, but a regime of ruptures and controlled disorder on the geopolitical front is here to stay. If the tariff threat resurfaces or the Greenland deal falls through, the EU is likely to reinstate higher tariffs and pursue targeted retaliation. Legal developments, such as pending US Supreme Court decisions and the possible use of the EU’s Anti-Coercion Instrument, are also acting as constraints on further escalation. Trump will likely try to extract maximum concessions, but for now, the immediate tariff threat is off the table.
In this environment of geopolitical uncertainty but supportive economic fundamentals, a globally diversified stance is essential. We look to broaden opportunities in global equities, including, for example, small/mid-caps in Europe and Japan that can benefit from domestic demand, and EM equities like Brazil and India. We maintain a balanced approach in fixed income with a preference for EU/UK duration and Italian BTPs, and we favour in DM corporate credit (especially EU IG financials) and high-yielding EM bonds. Gold remains a preferred portfolio stabiliser amid ongoing uncertainty.

Read the full article on the Amundi Research center

Geopolitics tariffs and market volatility

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How Tariff Policy and Geopolitical Tensions Drive Market Volatility

Key points

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Read the full article on the Amundi Research center