Lunes 26 de Enero del 2026
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The week’s events delivered a masterclass in distinguishing between political spectacle and genuine market-moving developments. President Trump’s threats to impose tariffs on eight European countries over Greenland sent the S&P 500 down 2.1% on Tuesday 20th January, wiping more than $1.2 trillion in value from the index. Yet within 24 hours, Trump announced a framework agreement with NATO regarding Greenland and called off the threatened tariffs, triggering the S&P 500’s biggest advance since November, with the gauge back in the green for 2026.
This rapid reversal demonstrates precisely what seasoned investors understand: geopolitical bluster rarely translates into sustained market damage when underlying fundamentals remain sound. The episode provided a textbook example of why responding to headlines with portfolio action destroys value. Investors who sold during Tuesday’s selloff crystallised losses that proved entirely unnecessary, whilst those who maintained discipline recovered their paper losses within a single trading session.
The World Economic Forum’s annual gathering in Davos unfolded against this backdrop of trans-Atlantic tension, with over 60 heads of state attending. What emerged was not consensus but rather a stark clash of visions about economic integration. US Commerce Secretary Howard Lutnick declared that “globalisation has failed the West,” whilst Chinese Vice Premier He Lifeng urged countries to board the “giant ship” of globalisation. French President Emmanuel Macron emphasised that Europe must defend “an effective multilateralism,” and Canadian Prime Minister Mark Carney noted that “this bargain no longer works.”
This ideological divergence matters less for markets than one might imagine. Whilst rhetoric about deglobalisation commands attention, actual policy implementation moves far more slowly than political discourse suggests. Companies have already adapted supply chains following pandemic disruptions, and corporate behaviour responds to economic incentives rather than ministerial speeches.
What should reassure investors is the speed with which markets absorbed the shock and recovered. The strength stems from multiple sources. Goldman Sachs strategists project the S&P 500 to produce a 12% total return in 2026, expecting earnings per share to increase 12% in 2026 and 10% the following year. Morgan Stanley expects the S&P 500 to rise to 7,800 in the next 12 months, a 14% gain from current levels. These forecasts reflect confidence in corporate earnings growth rather than valuation expansion, a far more sustainable foundation for market appreciation.
Despite the week’s political distractions, the structural drivers supporting technology stocks continue strengthening. Taiwan Semiconductor delivered another record quarter and expects to boost capital spending in 2026 to between $52 billion and $56 billion. Industry leaders like Mark Zuckerberg and Satya Nadella have said they are racing to keep up with orders their customers are placing right now, with Big Tech’s capital spending expected to exceed $500 billion in 2026.
Yet investors should maintain perspective about implementation timelines. Wall Street expects 2026 will see a reckoning of AI as markets demand tangible returns, with Deutsche Bank analysts noting that “generative AI will be transformative but not right now.” This does not invalidate the AI investment thesis but rather suggests that near-term expectations require calibration.
For investors navigating this environment, several principles deserve emphasis. First, political rhetoric and genuine policy implementation occupy different universes. The Greenland tariff threat evaporated within days because it lacked strategic coherence.
Second, the debate over globalisation’s future matters far less for portfolio construction than the underlying reality that global commerce adapts rather than disappears. Companies will continue optimising supply chains across borders because economic incentives overwhelm political positioning.
Third, the AI investment case rests on infrastructure deployment that continues at unprecedented scale. Goldman Sachs forecasts US GDP to grow 2.7% in 2026, expecting the Fed to make two rate cuts of 25 basis points each. This combination of solid growth and accommodative monetary policy provides an environment where technology infrastructure investment can continue expanding.
Yet fourth, elevated valuations demand respect. The S&P 500 trades at a forward price-to-earnings ratio of 22x, matching the peak multiple in 2021. This does not necessitate bearishness but rather selectivity, favouring companies with demonstrable earnings growth.
The week’s events ultimately reinforced a timeless investment truth: markets respond to headlines with volatility but to fundamentals with direction. For disciplined investors focused on fundamentals rather than headlines, this environment continues offering opportunities that reward patience over panic.
We would like to thank Dominion Capital Strategies for writing this content and sharing it with us.
Sources: Bloomberg, Yahoo Finance, Marketwatch, MSCI.
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