Stocks from the US, currencies and commodities rose Monday as investors embraced a deal between the US and Mexico to rewrite parts of the North American Free Trade Agreement.
Monday's deal marks a major change on Wall Street, where investors have been struggling in the last two years to worry that escalating trade rhetoric and increasing tensions with a large part of Asia and Europe could damage global growth.
Although earnings could show that US stock indices have more room to grow, even with the S & P 500 now in its longest bull-market run, many analysts and traders said they were cautious about overreacting to whatever the latest in a comprehensive back and forth between the US and its trading partners.
Stocks booked early earnings on the news and pushed the S & P 500 0.8% to a record, making the Nasdaq Composite the first lock above 8000 and the Dow Jones Industrial Average after 1 February to the first after 26000 came.
The Mexican peso and Canadian dollar rose, while the US dollar fell.
Tensions on the trade have hit the markets hard since the White House imposed worldwide tariffs on steel and aluminum earlier this year and indicated that this would put pressure on China, worrying about a slowdown in growth that would result in an expected increase in US growth. could reduce by tax incentives such as taxes cuts.
"It is definitely one
Chief Investment Officer at Sunrise Capital Partners LLC. The potential deal supports some investors' argument that "
wants to trade trade agreements, instead of exchanging wars. & # 39;
The news from Monday gave rise to betting that there would be other trade compromises, and some analysts suggest that there has been a months-long spit between the US and China, but perhaps not as stubborn as it seems.
Although earnings were broad on Monday and nine of the 11 S & P 500 sectors were up, trade-sensitive assets were among the best performing players on the market. The materials and industry sectors both increased by more than 1%, and car manufacturers rose, after falling for tariff fears.
climbed $ 1.74, or 4.8%, to $ 37.69 and scored his best day in nearly three months, while
rose 31 cents, or 3.2%, to $ 9.99. The car sector is one of the most controversial areas for trade negotiations and analysts had worried that car manufacturers were particularly vulnerable to the consequences of tariffs and production rules.
President Trump, referring, inter alia, to the introduction of tariffs on car imports from Canada, said negotiations with that country would soon be resumed.
Investors fear that protectionism would slow the world economy and reduce demand for everything from tractors to computer chips. This fear has led to money managers benefiting the United States, where growth has increased and corporate earnings have risen, and have pushed the dollar to its highest point in 15 months earlier this month.
The concerns also affected prices for raw materials used in production and construction, including copper, iron ore and palladium, which is used to make exhaust filters for cars.
But bets on a rebound in global growth continued on Monday: the Mexican peso rose 0.8% and the Canadian dollar gained 0.5% against its US counterpart. New optimism towards world trade also stimulated the currencies of other countries that were dependent on exports, including South Korea and Chile.
The WSJ Dollar index, which measures the American currency against a basket of 16 others, fell for the ninth time in the past 10 sessions and dropped by 0.2% to 89.10. Raw materials from silver to platinum extended their recent upswing, with the most actively traded platinum futures increasing 1.9%.
Perhaps the biggest reaction to Monday's news came on the market for lean pigs, where futures prices rose by 5.8%, because traders expected that Mexico, the largest consumer of pork from the US, would lift the prices for the meat.
Global equities, commodities and currencies that have stood together over the past few months for one of the few times have signaled that investors increasingly trust that trade policy will not disrupt economic growth, analysts said.
"It is a clear overhang that is removed and gives people hope," said
senior portfolio manager at Globalt. "We need more details, but trade policy is going in the right direction."
Nevertheless, analysts warned that there are obstacles for the US to solve its fight with China. Although the world's two largest economies have charted the talks to end the confrontation with planned meetings in November between President Trump and the Chinese leader
negotiations last week have not produced any visible signs of progress.
Adding to investor concerns: Chinese economic growth has shown signs of weakness. The government said this month that expenditures on so-called fixed assets such as factory machines and public works in the first seven months of the year to the lowest point in almost two decades have been cooled.
But some investors said Monday's news was a sign that the Trump government was prepared to compromise on trade policy, possibly paving the way for further agreements.
"This is a faster progress than what we expected" about trade, said
senior global equity strategist for Wells Fargo Investment Institute. "I feel enthusiasm there."
– Gunjan Banerji and
contributed to this article.