LONDON: Stock markets climbed on Tuesday, tracking another Wall Street record 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.
“The positive sentiment in the US on the back of the trade deal with Mexico has boosted sentiment,” said David Madden, analyst at CMC Markets UK.
“Trade concerns have been hanging over global markets for months, and the US-Mexico deal proves that there is light at the end of the tunnel.”
About 1030 GMT, London’s benchmark FTSE 100 index was up 0.4 percent. In the eurozone, Frankfurt’s DAX 30 won 0.1 percent and the Paris CAC 40 gained 0.2 percent.
“The FTSE 100 is playing catch-up with the rest of Europe following the UK bank holiday yesterday,” Madden explained for the London’s market’s stronger gains.
The US-Mexico agreement meanwhile 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.
The pact was described by Trump as “a big day for trade” and it sent New York’s S&P 500 and Nasdaq stocks indices to fresh all-time highs on Monday, while the Dow broke 26,000 for the first time since January.
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.
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.”
Mexico’s peso jumped more than one percent on the news but struggled to maintain the gains.
Elsewhere in foreign exchange, Turkey’s lira weakened to around 6.2 against the dollar as the country’s markets reopened after a week-long holiday, with dealers continuing to fret over the financial crisis in the country.
The euro added to Monday’s gains that came on the back of data showing business confidence in the German economy recovered as fears over a US trade war eased.
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”.–AFP