U.S. stocks posted strong gains on Monday, with the benchmark S&P 500 and the Nasdaq hitting all-time highs, as the United States and Mexico reached a deal to replace the North American Free Trade Agreement.
Shares of automakers, which stand to gain from the deal, rose with Ford up 2.7 per cent, General Motors gained 4.2 per cent and Fiat Chrysler climbed 4.1 per cent.
The trade-sensitive industrials sector was up about 1.11 per cent. Caterpillar rose 2.7 per cent and was the second-biggest percentage gainer on the Dow Jones industrial average.
The U.S.-Mexico reached a deal to replace NAFTA and talks with Canada were expected to begin immediately in the hopes of reaching a final agreement by Friday, a senior U.S. trade official said.
“The market is banking on further trade deals with the Mexico talks at least going somewhere,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“Trump just made an unofficial announcement ... but I think the market was expecting it and it’s not new news. It just amplified over the weekend.”
Also helping sentiment was Washington pressing the European Union to speed up trade negotiations.
The Dow Jones Industrial Average was up 221.91 points, or 0.86 per cent, at 26,012.26, the S&P 500 was up 20.12 points, or 0.70 per cent, at 2,894.81 and the Nasdaq Composite was up 75.14 points, or 0.95 per cent, at 8,021.11.
Eight of the 11 major S&P 500 sectors were higher. The top percentage gainer was the materials sector with a 1.55-per-cent increase.
The defensive utilities and real estate sectors were down 0.82 per cent and 0.5 per cent.
Tesla Inc dropped 2.6 per cent after abandoning a plan to take the electric carmaker private.
Canada’s main stock index advanced on Monday in a broad-based rally
At 11:51 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 95.67 points, or 0.59 per cent, at 16,451.74.
All 11 major TSX sectors advanced, led by a 0.5-per-cent gain in the energy sector.
Suncor Energy, Canadian Natural Resources and Cenovus Energy rose about 1 per cent and were the biggest boost to the energy group.
Gains in heavyweight bank stocks led the financials sector 0.5 per cent higher. The industrials sector rose 0.7 per cent.
The materials sector, which includes precious and base metals miners and fertilizer companies, added 1.3 per cent.
Marijuana producers led a 3.5-per-cent jump in health care stocks. Aphria Inc. jumped 12.1 per cent and Aurora Cannabis, which rose 5.6 per cent.
Oil prices were flat on Monday, pausing after last week’s substantial gains as a committee monitoring a deal between OPEC and non-OPEC producers saw production increasing and a U.S.-China trade dispute also weighed on sentiment.
Brent crude futures rose 11 cents to $75.93 a barrel.
U.S. West Texas Intermediate (WTI) crude futures fell 3 cents to $68.69 a barrel.
Last week, WTI posted a 4.3 percent weekly gain while Brent marked a 5.6 percent weekly increase.
Traders said prices pulled back after market intelligence firm Genscape reported that inventories at the Cushing, Oklahoma, delivery hub for WTI rose by about 764,800 barrels from Aug. 21 through Friday.
Members of an OPEC and non-OPEC monitoring committee found producers cut their July output by 9 percent more than called for in their output reduction pact, two sources familiar with the matter said. This compared with a compliance level of 120 per cent for June and 147 per cent for May, meaning participants have been steadily increasing production.
The Organization of the Petroleum Exporting Countries and other producers led by Russia agreed in June to return to 100-per-cent compliance with oil output cuts that began in January 2017. This follows months of underproduction by Venezuela and other producers which cut output by 160 per cent of the agreed target.
Reuters