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Stocks climb as markets celebrate deal
August 29, 2018
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NEW YORK: A global stocks index advanced to more than five-month highs on Tuesday, lifted by investor optimism that a US-Mexico deal will help avert a global trade war.

Monday’s news of the US-Mexico agreement on trade pushed the S&P 500 and Nasdaq indexes to record highs, and indexes across Europe and Asia followed Wall Street’s lead, inching to multi-month highs.

The dollar, which had been a haven as investors anticipated contentious trade disputes and US Federal Reserve interest rate hikes, slipped to a four-week low. Emerging market stocks hit their highest since Aug. 10.

“Global trade tensions have undoubtedly been the most significant source of risk in 2018,” said Hussein Sayed, chief market strategist at FXTM.

“The US-Mexico deal seemed to boost confidence that the trade war is moving closer to an end, and the next question is ‘Who’s next to close a deal with Trump?’” he said.

MSCI’s benchmark world share index followed Monday’s best performance in over four months with a 0.21 per cent gain.

The Dow Jones Industrial Average rose 44.39 points, or 0.17 per cent, to 26,094.03, the S&P 500 gained 2.16 points, or 0.07 per cent, to 2,898.9 and the Nasdaq Composite added 12.50 points, or 0.16 per cent, to 8,030.39.

Benchmark 10-year notes last fell 10/32 in price to yield 2.8858 per cent, from 2.85 per cent late on Monday.

Disputes on trade have weighed on investor sentiment for much of 2018, despite solid economic fundamentals and robust corporate earnings. Many remain cautious.

Paul Donovan, chief economist at UBS Global Wealth Management, said markets’ assumption that Canada will go along with the U.S.-Mexico deal is not “zero risk.” The three countries are currently part of the North American Free Trade Agreement, and U.S.-Canada talks are due later on Tuesday.

US President Donald Trump threatened he still could put tariffs on Canadian-made cars and demanded concessions on Canada’s dairy protections.

“If Canada does not join, then getting the agreement of (US) Congress (to the deal) will be trickier,” Donovan said.


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