INSTANT VIEW-Investor reaction as U.S. President Trump withdraws tariff threat, says Greenland deal framework reached

Jan 21 (Reuters) - U.S. President Donald Trump on Wednesday withdrew a threat to impose tariffs on a number of nations for their stance on Greenland, saying he had reached the outlines of a deal with NATO on the island's future.

"Based upon this understanding, I will not be imposing the tariffs that were scheduled to go into effect on February 1st," Trump wrote on Truth Social after a meeting with NATO Secretary General Mark Rutte in Davos. He did not give details of the deal.

MARKET REACTION

*U.S. stocks sharply extended gains; S&P last up 1.4%

*U.S. Treasury yields extend fall; 10-year yield last down 4.2 basis points at 4.255%

*U.S. dollar index last up 0.1% at 98.79

MICHAEL BROWN, SENIOR RESEARCH STRATEGIST, PEPPERSTONE, LONDON

“Very predictable, I suppose, as we had been viewing this as an ‘escalate to de-escalate’ situation all along.”

“Now that geopolitical risk has been dialed down by many notches, I’d expect that participants will re-focus on what remains a solid equity bull case, as seen by dip buyers already stepping in, while risks to the USD also tilt to the upside, as we again focus on the US macro outlook, where risks tilt firmly to the upside.”

“Frankly, the specifics of the ‘deal framework’ don’t really matter, just that there shan’t be an escalation, and that tariffs won’t happen, is enough to soothe any and all worries that investors had had.”

MATT WELLER, GLOBAL HEAD OF MARKET RESEARCH AT STONEX, GRAND RAPIDS, MICHIGAN

"We're seeing a bit of a relief rally in markets. Specifically on the FX front, the dollar is recovering, though notably still down from where it opened the week."

"I really do think the details perhaps are not as relevant, even perhaps if they never come to light. The near-term crisis appears to be behind us, and we'll wait to see what crops up next to drive sentiment."