Former U.S. President Donald Trump has announced the cancellation of planned tariffs on European nations following discussions with NATO leadership, pointing to a tentative framework for a future deal on Greenland and Arctic security. The move marks a rare reversal in Trump’s recent hardline trade rhetoric toward Europe and comes amid growing concerns over transatlantic relations, NATO cohesion, and market volatility.
Trump Cancels Planned Tariffs on Europe
In a post on his Truth Social platform, Trump said he would no longer impose a 10% tariff on eight European countries, which had been scheduled to take effect on February 1. The tariffs were initially framed as retaliation against European support for Greenland amid renewed U.S. pressure over the strategically critical Arctic territory.
According to Trump, the reversal followed what he described as a “very productive meeting” with NATO Secretary General Mark Rutte, during which both sides agreed on the framework of a future deal covering Greenland and the broader Arctic region.
“This solution, if consummated, will be a great one for the USA and all NATO nations,” Trump wrote, adding that discussions are also underway regarding the Golden Dome missile defense system as it relates to Greenland.
Ibovespa Hits Fresh Record as Foreign Capital Floods Brazil and the Dollar Weakens
Brazil’s stock market extended its historic rally on Thursday (22), with the Ibovespa jumping 2.2% to a new all-time closing high of 175,588 points. During the session, the benchmark index briefly surpassed the 177,000-point mark, reinforcing a streak of consecutive records seen throughout the week.
Meanwhile, the U.S. dollar fell 0.67% against the Brazilian real, closing at R$ 5.28, its lowest level since November. The combination of strong equity inflows and currency appreciation underscores a broader global rotation of capital toward emerging markets, with Brazil emerging as one of the main beneficiaries.
Foreign Capital Drives Brazil’s Stock Market Rally
Market participants point to robust foreign inflows as the primary driver behind the Ibovespa’s performance. Global investors have been reallocating part of their portfolios toward emerging markets perceived as less exposed to rising tensions between the United States and Europe.
Brazil, with its deep exposure to commodities and high real interest rates, has become an attractive destination for international capital seeking diversification and protection amid geopolitical uncertainty.
Data from B3 indicate that foreign investors have injected between R$ 9 billion and R$ 10 billion into Brazilian equities in recent days, a volume that, while modest by global standards, has a significant impact on domestic prices.
Dollar Weakness, Not Real Strength
According to market analysts, the recent appreciation of the Brazilian real reflects broad-based dollar weakness, not isolated strength in Brazil’s currency. The U.S. dollar has been losing ground not only to the real but also to other emerging-market currencies, including the Chilean peso.
This shift suggests a change in global risk perception. Traditionally, periods of uncertainty favor the dollar. Recently, however, investors have increasingly turned to commodities such as gold and silver as safe havens. As those assets became more expensive, capital began flowing into commodity-linked equity markets, including Brazil.
Commodities and Blue Chips Lead the Charge
The Ibovespa’s rally has been led primarily by blue-chip stocks, particularly companies tied to commodities such as Vale (VALE3) and Petrobras (PETR3; PETR4), as well as major banks. These stocks offer the liquidity foreign investors require, allowing them to enter and exit positions efficiently.
Petrobras experienced intraday volatility, rising sharply before retreating as oil prices softened. Even so, the broader commodities complex continues to provide structural support to the index.
Analysts note that smaller-cap stocks remain largely sidelined, as many lack the liquidity demanded by large international funds.
Global Context: U.S. GDP and Market Rotation
The positive sentiment was reinforced by fresh data from the United States. The U.S. economy grew 4.4% in the third quarter of 2025, marking its fastest pace since 2023. While strong growth could justify higher interest rates in the U.S., markets are increasingly focused on political uncertainty surrounding the Federal Reserve and the White House.
Unconventional fiscal and trade policies under President Donald Trump, combined with ongoing tariff disputes, have led global investors to trim marginal exposure to U.S. assets and reallocate small portions to other regions, including Latin America, Asia, and Europe.
Davos: Calm Markets, Confusing Signals
At the World Economic Forum in Davos, market reaction was muted. Trump’s speech drew attention more for its erratic tone than for concrete policy signals, oscillating between calls for peace and renewed geopolitical provocations, including earlier remarks on Greenland.
While Davos itself did not generate immediate volatility, Trump’s recent retreat from aggressive trade measures against Europe helped ease global risk sentiment, indirectly supporting emerging-market assets like Brazilian equities.
High Real Rates and the Carry Trade Advantage
Brazil continues to offer one of the highest real interest rates in the world, with inflation-adjusted returns estimated between 7% and 9% annually. This differential sustains carry trade strategies, attracting global capital into both Brazilian fixed income and equities.
Even with expectations of future rate cuts, analysts believe the pace of easing will be gradual, keeping Brazil’s yield advantage intact through much of the year.
Can the Rally Continue?
Market consensus suggests that the Ibovespa still has room for further gains, particularly if interest rate cuts begin to be signaled more clearly by Brazil’s Central Bank. Lower rates tend to boost equity valuations by improving cash flow projections and reducing financing costs.
However, analysts caution that sustaining levels above 170,000 points in the long term will require broader participation beyond commodities and banks. A sustained rally would depend on:
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A clearer cycle of interest rate cuts
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The return of domestic investors to equities
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Improved inflows into equity and multi-asset funds
Elections and Political Risk: A Secondary Concern
Despite Brazil heading into an election cycle, political noise has not yet become a decisive factor for foreign investors. Historically, volatility rises closer to elections, but for now, global dynamics outweigh domestic politics.
That said, markets remain sensitive to rumors and polling shifts. Past episodes have shown that even minor political headlines can trigger sharp, short-term corrections.
A Global Rotation That Favors Brazil
The current Ibovespa rally reflects a global rebalancing of portfolios, not a mass exodus from U.S. markets. The United States remains the dominant destination for global capital, but marginal reallocations, even as small as 5%, are enough to significantly move prices in markets like Brazil.
As long as geopolitical uncertainty persists, commodities remain relevant, and Brazil’s real rates stay elevated, foreign capital is likely to keep flowing into Brazilian assets, supporting both the stock market and the currency.
