The announcement of a free trade agreement between the United States and Mexico has reduced the tensions on world trade and led to US stock exchanges closing the trading session on Monday. The financial sector and the input sector benefited most from the Washington news and supported the main equity indices in New York, with the Dow Jones gaining more than 26,000 points and the S & P 500 becoming a historically high slot. The Nasdaq, which for the first time beat the 8,000 points with the support of gigantic techies, also set a record.
The Dow Jones index reached its highest level since 1 February and closed 1.01% to 26.049.64 points. The S & P 500 renewed a record of 0.77% at 2.896,74 points, while the Nasdaq went 0.91% to 8,071.90 points ahead.
The main US equity indicators were favored by the scenario of a larger search for assets that are considered riskier, such as equities. Earlier in the day, the use of the "countercyclical factor" in the exchange rate of the People's Bank of China (PBoC) ruled as a measure to curb the fall of the yuan, weakening the hypothesis that currency weakened. used in a total trade war between Washington and Beijing. For Strategist Maximillian Lin of NatWest Markets this is a & # 39; defensive measure & # 39; to delay the retreats of the yuan, no supposed concession to the US in the trade dispute.
However, the stronger steps of the subsidies came with the agreement between the US and Mexico. According to the USTR, the new agreement requires at least 75% of the car parts used in vehicles produced in the United States and Mexico to come from these two countries – currently the quota is 62.5%, according to MET Capital Markets. In addition, the notion between the two countries "uses trade rules to generate higher wages" by stipulating that at least "40% to 45% of the car parts are made by employees who receive at least $ 16 per hour."
Other points of the agreement were zero duties on agricultural products placed on the market between the two countries, the application of the sunset clause, which provides for the renewal of the trade pact every six years and the end of the trade dispute settlement system, which is being implemented. for example under the North American Free Trade Agreement (NAFTA). Regarding the insertion of Canada into the new pact: "Let's see if they can be part of the deal," said US President Donald Trump. Some points of agreement between Americans and Mexicans affect parts of the NAFTA that Canada wanted to preserve, such as the dispute resolution system.
Given the less cloudy scenario in world trade, the actions of assemblers showed robust progress. Ford shares were closed with a profit of 3.20%, Fiat Chrysler won 4.82% and General Motors jumped 4.84%. Investors feared that car manufacturers, one of the biggest concerns of NAFTA, would be particularly vulnerable to the consequences of tariffs and production rules. If Canada joins the negotiations, there will be more relief from the uncertainties on the market.
The financial and input sectors showed profits corresponding to the commercial news. Goldman Sachs shares rose 3.19% and Morgan Stanley's share increased by 3.64%, while DowDuPont's share showed a 2.31% gain.
In the technology sector, the highlight was Apple, which rose 0.82%, amid reports on the company's plans for the next series of iPhones. Apple plans to launch three new phones during the fall of the northern hemisphere and try to generate new features for the low cost model through more color choices and the similarities with the iPhone X. The new device should have aluminum edges, not steel, and will have an LCD screen while the iPhone X has an OLED screen.