London: Stock markets climbed on Tuesday, with Wall Street pushing even higher a day after setting records following a trade deal struck between the United States and Mexico.
Equities had already been enjoying a run higher after Federal Reserve boss Jerome Powell last week indicated that the US central bank would not aggressively raise interest rates.
“US stocks are adding to a recent run in early action that has the markets back in record high territory, with the global markets finding support from yesterday’s bilateral trade agreement between the US and Mexico, which appeared to alleviate some of the festering uneasiness,” said analysts at Charles Schwab brokerage.
The Dow added 0.2 percent at the open.
In opening trading, the S&P broke through the 2,900 level for the first time ever, while the Nasdaq Composite also blew by the intraday record it set the day before.
In afternoon trading in Europe, London’s benchmark FTSE 100 index was up 0.5 percent. In the eurozone, Frankfurt’s DAX 30 rose 0.1 percent and the Paris CAC 40 gained 0.5 percent.
The US-Mexico agreement raises hopes that the North American Free Trade Agreement, rejected by the White House soon after US President Donald Trump’s election, can be salvaged after Canada rejoins talks on Tuesday.
Analyst Patrick O’Hare at Briefing.com said that it is still unclear whether a three-way deal with Canada can be reached by the end of the week as needed, or whether the US Congress would approve a bilateral deal with Mexico.
“For now, market participants seem to be content knowing something got done at least with Mexico,” he said in a note to clients.
Mizuho Securities said in a note to clients that investors are monitoring “the US-Canada negotiations… and the impact on US-China trade talks”.
Monday’s agreement comes after officials from Washington and Beijing last week held talks aimed at easing trade tensions that have seen them hit each other with tariffs on tens of billions of dollars worth of goods.
– ‘Festive mood’ –
While the meeting did not achieve any breakthrough, the fact it took place was seen as a good sign.
Stephen Innes, head of Asia-Pacific trading at OANDA, said dealers were “in a festive mood” as the deal removed “one major hurdle that has been haunting North American investors for months”.
He added: “Markets are revelling in any trade positives… After all, a deal is a deal.”
However, Trump appeared to temper expectations for a fresh round of talks with China, saying after announcing the new pact that “it’s just not the right time to talk right now” before adding “eventually, I’m sure that we’ll be able to work out a deal”.
In foreign exchange trading, Turkey’s lira weakened to around 6.2 against the dollar, with dealers continuing to fret over the country’s financial crisis.
The pound slid after Prime Minister Theresa May indicated that a no-deal Brexit would not be a disaster for Britain, playing down warnings of serious consequences for the UK economy.
But it later rebounded following a report from the Evening Standard newspaper that Mark Carney had been approached about staying on another year as head of the Bank of England following the end of his term in June 2019.
“For me the Carney news (if true) is sterling positive,” said James Hughes, chief market analyst at AxiTrader, in a tweet.
“The currency seems to move more on clarity and stability over Brexit rather than positive or negative news. The continuity amid political uncertainty is… positive” for the pound, he said.
– Key figures around 1330 GMT –
New York – Dow Jones: UP 0.2 percent at 26,100.65 points
New York – S&P 500: UP 0.2 percent at 2,901.09
New York – Nasdaq: UP 0.3 percent at 8,039.01
London – FTSE 100: UP 0.5 percent at 7,617.89
Frankfurt – DAX 30: UP 0.1 percent at 12,554.75
Paris – CAC 40: UP 0.5 percent at 5,504.72
EURO STOXX 50: UP 0.1 at 3,460.15
Tokyo – Nikkei 225: UP 0.1 percent at 22,813.47 (close)
Hong Kong – Hang Seng: UP 0.3 percent at 28,351.62 (close)
Shanghai – Composite: DOWN 0.1 percent at 2,777.98 (close)
Euro/dollar: UP at $1.1725 from $1.1680 at 2100 GMT
Pound/dollar: UP at $1.2926 from $1.2895
Dollar/yen: UP at 111.08 yen from 111.07 yen
Oil – Brent Crude: UP 57 cents at $76.78 per barrel
Oil – West Texas Intermediate: UP seven cents at $68.94