US-Mexico trade deal news buoys global equities - 28.8.2018

S&P 500, Nasdaq end at records

US stock market rally continued on Monday on US-Mexico trade deal news. The S&P 500 gained 0.8% to 2896.74. Dow Jones industrial rallied 1% to 26049.64. The Nasdaq composite index rose 0.9% to 8017.90. The dollar weakening slowed: live dollar index data show the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, fell 0.4% to 94.727 and is lower currently. Stock index futures indicate higher openings today.

Relief the US is willing to compromise on harsh bilateral trade demands after it imposed steep unilateral tariffs on imports from its trade partners boosted investor optimism. President Trump said the preliminary trade agreement would help to replace the North American Free Trade Agreement, adding that talks with Canada to join a reworked trade deal would begin soon. Weak economic data were shrugged off: the Chicago Fed’s index of national economic activity declined from 0.48 in June to 0.13 last month, indicating slowing of factory activities.

FTSE 100 opens higher than main European indices

European stocks extended gains on Monday on US-Mexico trade talks optimism. The GBP/USD and EUR/USD continued their climb but both pairs are moving lower currently. The Stoxx Europe 600 index rose 0.5%. The DAX 30 rallied 1.2% to 12538.31 and France’s CAC 40 gained 0.9%. The UK market was closed for a holiday. Markets opened 0.2% - 0.7% higher today.

Unlike the US, German economic data added to tailwind for euro-zone indices: the Ifo business climate index jumped to 103.8 in August from 101.7 in July when a reading of 101.9 was forecast. It was the first increase since November which lifted the index to its highest level since February.

Asian indices mixed as US imposes duties on wheel imports from China

Asian stock indices are mixed today on lingering US-China trade war concerns after President Trump’s comment it is not the right time for US-China trade talks. Nikkei gained 0.1% to 22,813.47 helped by resumed yen slide against the dollar. Chinese stocks are lower as the US Commerce Department said it would impose duties on steel wheels from China based on a preliminary determination they were subsidized at rates above 50%: the Shanghai Composite Index is down 0.4% and Hong Kong’s Hang Seng Index is 0.5% higher. Australia’s All Ordinaries Index extended gains 0.6% as the Australian dollar climb against the greenback reversed.

Brent slips

Brent futures prices are edging lower today. Prices extended gains yesterday on OPEC reports oil producers cut July output by more than agreed. October Brent crude settled 0.5% higher at $76.21 a barrel on Monday.

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