Market volatility over Greenland issue to continue due to ‘few sticking points’: Report

New Delhi: Investors are likely to remain on edge over the proposed US framework on Greenland, and near-term volatility related to this issue can continue, a report has said.

The report from Bank of Baroda said that market participants are awaiting more details that could determine whether negotiations succeed or unravel.

“Going ahead, investors are likely to await more details of the deal, as there are a few sticking points which can derail the negotiations. Hence, some volatility can be expected,” the report said.

Several analysts expect the arrangement to resemble an update of the existing security agreement between the US and Denmark, which was signed in 1951, the report noted.

Further negotiations will follow in due course which will cover areas such as US military presence in Greenland, as well as use of its mineral resources and sovereignty, said Aditi Gupta, Economist, Bank of Baroda.

US President Donald Trump has framed Washington’s interest in Greenland as driven by national security concerns, but the island’s largely unexplored mineral wealth including oil, gas and rare earth elements is of interest to US, the report said.

“The announcement of a framework deal between the US and NATO has helped to soothe investors’ nerves, however the details of the deal are still fuzzy,” it added.

Geo-political tensions escalated and markets went into turmoil after the US President intensified rhetoric to annex Greenland and threatened economic measures against European countries that oppose US plans. In response, several European nations, including France, Germany, Sweden amongst others increased military deployment in Greenland, further escalating tensions.

Trump had announced a 10 per cent additional tariff on goods from the UK, Denmark, Norway, Sweden, France, Germany, Netherlands and Finland from February 1, 2026. The rate was expected to increase to 25 per cent by June 1, 2026.

Later, he backed off from his threat of imposing tariffs on European countries along the sidelines of the World Economic Forum meeting in Davos.
IANS