Trump’s "Carrot" Approach Lets the DAX Breathe a Sigh of Relief
The World Economic Forum in Davos appears to be the perfect platform for US President Donald Trump to seal his next major deal. While the exact details remain sparse, the US President is already speaking of a "very good deal for everyone" and a "fantastic deal for the USA." Meanwhile, the NATO Secretary General emphasized that much work still lies ahead for the negotiating parties.
The Trump Pattern: Power Play Followed by Concessions
The US President's negotiation tactic is becoming increasingly clear: express interest, hold opponents in check through a display of power (such as the recent Greenland tariff threats), and then use a "carrot" to secure his interests. By following this pattern, the President continues to reshape the global order, always ensuring the markets are kept in high spirits. Donald Trump remains in a league of his own when it comes to this style of negotiation, and currently, there seems to be no counter-strategy. Markets and politics appear to be in a state of full dependency.
Markets React: A Turnaround in Sight?
Investors cheered toward the close of trading on Wednesday as the preliminary results from Davos were announced, effectively initiating a market turnaround. The DAX stabilized after its recent slide, paring early losses to finish at 24,560 points. Assuming no denials emerge to challenge the validity of the talks, it is expected that the upward momentum will resume. However, the exact nature of the "deal" remains a mystery as final details are still being ironed out—leaving plenty of room for further surprises.
Conclusion: Is the Correction Over?
Following the reversal during yesterday’s session, investors may assume that the correction has bottomed out and rising prices are back on the horizon. Nevertheless, one ear should remain firmly fixed on the news ticker. The negotiation tactics of the US administration are highly dynamic and could shift again at any moment. Technically, the DAX has defended the crucial support zone around 24,500 points, but until a formal agreement is signed, volatility remains the guest of honor in Davos.
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