Trump torpor: What explains markets’ muted response to Venezuela and Greenland?
It is understandable that of the dozens of 2026 market outlook papers published by banks and analysts last month, not one predicted that Venezuela’s autocratic leader, Nicolas Maduro, would be captured in a historic overnight raid just three days into the New Year.
Even more forgivable, is the fact none foresaw the rapid escalation of Donald Trump’s threats to annex Greenland, a move that his European allies have been swift to rebuke, and which the Danish Prime Minister has warned would lead to the break-up of Nato.
And yet, less than a week into 2026, that is where we are.
Since Saturday’s astonishing assault on Caracas and the subsequent crescendo of expansionist rhetoric, international affairs commentators have talked breathlessly of ‘spheres of influence’ and Trump’s desire for hegemony over what he sees as the US’s realm. We are at the juncture – they have tended to add – of a shift from a rules-based world to a ‘multipolar’ one in which the world’s great powers have licence to carve up the map as they see fit, treading roughshod over decades of post-war consensus.
One might expect the events of this week might also cause market participants to dial down their risk appetite, even if only momentarily. But with the notable exceptions of a few easily explained big movers, at a macro level, the reaction has been muted. If anything the risk-on mood that dominated 2025 has only accelerated into the New Year.
All-time highs abound across major blue-chip indexes, from the S&P 500 and Nikkei to the FTSE 100, and from Frankfurt’s Dax to Paris’s Cac. And while gold may have climbed sharply, sovereign debt markets – the other traditional port of call for waiting out moments of geopolitical uncertainty – barely budged.
Even oil futures – representing bets on oil delivered later this month – behaved largely as if the US foray into Venezuela never happened.
The financial history of geopolitical flashpoints
Such apathy is a historical aberration. Four years ago, Russia’s invasion of Ukraine sent European equities down roughly four per cent. Further back, and 2001’s 9/11 terrorist attacks sparked a famously brutal rout. In what was one of the largest single session sell-offs in US stock market history the Dow Jones Industrial Average (DJIA) fell north of seven per cent when trading reopened a week after the attack. After Pearl Harbor, in 1941, the DJIA fell 3.5 per cent.
One exception was the onset of the Iraq War, which caused US equities to rally 8.4 per cent over the month after Bush’s military action was confirmed. In that instance, the single figure gains only recovered weeks of losses imposed by the period of uncertainty before George Bush’s eventual declaration of war.
But generally, a sudden shift in the geopolitical sands causes – even if only temporarily – a consolidation as old as time: bonds and cash up, stocks down.
There are logical explanations to some elements of the restrained reaction. In oil, turmoil of this sort in Venezuela was never likely to trigger a sudden shift in global markets, according to Maurizio Carulli, a global energy analyst at Quilter Cheviot. While the country may boast the world’s largest proven oil reserves, its current output represents just one per cent of the market. Any downward price pressure from a glut of supply “would require years of work and favourable conditions”, he says.
In equity markets, Kathleen Brooks, research director at XTB, believes investors were happy to look through the move in anticipation of a big week of economic data, after the US government shutdown starved traders of official releases.
Trump torpor plagues markets
But is another, more psychological factor – one that could, perhaps, be branded ‘Trump torpor’ – behind the worldwide indifference?
Last year did not contain a shortage of black swan events emanating from the White House. There was his air strike on Iran that for a moment threatened to be the catalyst for a regional hot war. Not to mention his administration’s constant threats to cosseted European allies and monthly assaults on the Federal Reserve. All of which was punctuated by his capricious, hot-cold tarrif-making – mostly conducted via Truth Social missives and often relating to China, the world’s most significant trading relationship.
But after a veritable meltdown over his so-called Liberation Day tariffs in April, as the year wore on, markets increasingly took these tectonic shocks in their stride.
This week has been no different. Traders, according to Saxo Markets’ Neil Wilson, “kind of yawned and shrugged” at events in Caracas, even while, in his eyes, they marked “a major shift in the way the global power game is played”.
All of which points to an emerging trend: just a quarter of the way through his second term, investors are already exhausted by and sceptical of the noise surrounding Trump’s presidency. And rather than trying to determine the signal, many are heeding a pair of truisms that have run through his time in office. First, that he is someone to be taken seriously but not literally (though Maduro may now dispute this) and second, that there is money to be made in the so-called Taco trade (Trump Always Chickens Out).
Events of the last 12 months, at least, would suggest their analysis is sound. But with the cacophony of America’s threats to a Nato ally accelerating, it might be prudent also to note a sabre-rattling set of remarks from Trump lieutenant Marco Rubio.
“The President of the United States is not a game player,” the secretary of state said in the wake of Saturday’s raid. “When he tells you he’s going to do something and address a problem, he means it.”
Should Rubio be taken seriously or literally? Perhaps we’re all just too exhausted to care.