January kicked off the year with geopolitical tensions including a U.S. military operation in Venezuela, Trump’s threats to Greenland, new tariff pressures, the possibility of another U.S. government shutdown and uncertainties around the nomination of a new Fed Chair. Global equity markets largely shook off the early volatility with U.S. indexes ultimately delivering modest gains. The S&P 500 reached the 7,000 point mark and closed the month up 1.4%, while the Nasdaq Composite advanced 1.0%. European equities continued to outpace their U.S. peers, bolstered by favorable sectoral valuations and economic momentum, as the STOXX 600 rose 2.4% over the period. Precious metals extended a historic rally not seen in decades as investors fled to safe-haven assets, though prices corrected heavily toward the end of the month, while Bitcoin fell to BTC/USD 84,000.
The Fed held rates steady at 3.50-3.75% following its January 28 meeting amid solid economic activity and a stabilizing labor market. Tensions escalated after President Trump threatened a criminal indictment against Fed Chair Powell, who publicly rebuked the move as political interference in monetary policy. The situation culminated on January 30 with Trump’s nomination of Kevin Warsh as the next Fed Chair, signaling a potential shift toward tighter policy and triggering a sharp correction in precious metals.
Ice, ice… maybe?
President Trump’s renewed push in early January to acquire Greenland from Denmark, framed around national security concerns tied to rising Russian and Chinese influence in the Arctic, reintroduced geopolitical risk into global financial markets. The push escalated rapidly into tariff threats on January 17 against Denmark and other European allies. While the U.S. maintains the strategically critical Pituffik Space Base, Trump’s public hints at a potential military operation were later walked back at Davos on January 21, instead promoting a NATO “framework” granting expanded U.S. access to Greenland without annexation (a loose analogy to the UK’s treaty-based military presence in Cyprus).
Politically, Denmark and Greenland rejected the proposals outright, accompanied by protests and limited troop reinforcements. The EU weighed potential tariff countermeasures of up to USD 93b, while Germany warned of strain on alliance cohesion. Beneath the noise lies a longer-term strategic calculus: Greenland has over 28m t of rare earths critical to defense and EV supply chains. Critical Metals, which is developing the Tanbreez rare earths project on the island, saw its stock spike by 62% in January.
EU’s mother of all deals… times two
The EU and India sealed a historic Free Trade Agreement (FTA) on January 27, forming a massive trade zone for ~2b people and 25% of global GDP. The deal cuts tariffs on 96.6% of EU exports to India and 99.5% vice versa, phased over 5-10 years. EU gains include reduced duties on cars (from 110% to 10%), high-tech machinery, chemicals, pharmaceuticals and aircraft, potentially doubling exports by 2032 and saving EUR 4b annually. India benefits from being granted access to European markets in textiles, apparel, leather, gems, jewelry, marine products, tea, and spices, adding USD 11.7b in exports while safeguarding agriculture. Overall, it possibly boosts EU GDP by 0.1% and India's by USD 19.2b yearly.
Meanwhile, the EU-Mercosur pact, signed January 17, covers 700m people across 31 nations, eliminating tariffs on 91-92% of goods. EU advantages: lower barriers on cars (up to 35%), machinery, chemicals, and agri-food products like wine, dairy, and olive oil, saving EUR 4b in duties and hiking exports by 50%. Mercosur (Brazil, Argentina, etc.) secures quotas for beef, poultry, sugar, soybeans, and lithium, with EU farmer protections; projected GDP lifts: 0.1% for EU, 0.3% for Mercosur by 2040. However, the ratification was delayed by the European Parliament's court referral on January 21, possibly to 2027.
Financially, these deals counter U.S. tariffs and Chinese influence, diverting USD 2-3b in trade flows. Long-term, they add EUR 77.6b to EU GDP.
EUR breaks out; precious metals correct after generational run
EUR/USD pair has recently broken above the key resistance level of 1.1830 and surpassed the September high of 1.1920. Historically, January often sets the tone for the FX market for the rest of the year, so this move warrants close attention. Looking ahead, EUR/USD near-term support lies near 1.1850, with potential upside toward 1.2500. A drop below 1.1800 would stabilize the situation, while a fall under 1.1600 could signal a significant change in trend.
Precious metals have experienced an exceptionally strong historical rally, surpassing all our targets much faster than expected. Gold climbed to record highs above XAU/USD 5,600 before a sharp pullback toward XAU/USD 4,700 by early February. Silver showed even more explosive momentum, starting the month near XAG/USD 80, surging past XAG/USD 120 in the final week of January, before retracing.
About Signet Bank:
Signet Bank is Latvia's leading investment bank, founded in 1991 and one of the first independent banks in Latvia. Signet Bank offers sustainable financing and investment solutions to local entrepreneurs and companies. Since 2021, Signet Bank has attracted additional financing of EUR 1 billion for more than 50 Latvian companies through bond and share issues, while new lending transactions amounted to EUR 500 million. In 2024, the financial resources under management reached EUR 1.6 billion. Signet Bank is the leading organizer of corporate bond and share issues in Latvia and one of the leading stock exchange brokers in the Baltics. Signet Bank's shareholders are twenty-four Latvian and international private investors, the largest of which are Signet Acquisition III (22%), whose sole shareholder is US investor Alexander Solovey, SIA Reglink (14%), founded by banking professional Irīna Pīgozne, and AS RIT Group (11%), a Latvian company owned by the Rapoport family.
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