Equities around the world rose on Monday while U.S. Treasury prices fell as risk assets were in demand after the United States shelved plans to impose tariffs on Mexico, easing worries the global economy would face another trade war.
The U.S. dollar gained against a basket of major currencies while the Mexican peso was on track for its biggest one-day percentage gain against the dollar since July 2018.
The U.S.-Mexico trade and migration deal also boosted emerging market stocks and sent U.S. government bond yields higher as investors favored riskier assets.
“There’s a nice follow through on last week’s optimism that global growth is likely to continue with trade tensions with Mexico backing off. There’s clearly a growth bias to the tilt of today’s market,” said Carol Schleif, deputy chief investment officer at Abbot Downing in Minneapolis.
U.S. stocks were also boosted by a United Technologies Corp agreement to combine its aerospace business with defense contractor Raytheon Co to create a new company worth about $121-billion.
The Dow Jones Industrial Average rose 78.74 points, or 0.3 per cent, to 26,062.68, the S&P 500 gained 13.39 points, or 0.47 per cent, to 2,886.73 and the Nasdaq Composite added 81.07 points, or 1.05 per cent, to 7,823.17.
Canada’s main stock index edged lower on Monday, as resources stocks declined.
The Toronto Stock Exchange’s S&P/TSX Composite index was unofficially down 14.70 points, or 0.09 per cent, at 16,216.26.
Seven of the index’s 11 major sectors were lower, led by a 0.7-per-cent drop in the industrials sector.
Both materials and energy stocks lost 0.6 per cent on the day as gold and oil prices declined.
Conversely, health care stocks jumped 3.2 per cent as marijuana producers gained. Cronos Group Inc. rose 9.2 per cent, while Aurora Cannabis Inc. and Canopy Growth Corp. finished 3.9 per cenr and 3.5 per cent higher, respectively.
The pan-European STOXX 600 index rose 0.21 per cent and MSCI’s gauge of stocks across the globe gained 0.67 per cent.
Emerging market stocks rose 1.51 per cent.
Benchmark 10-year notes were last down 17/32 in price to yield 2.1414 per cent, compared with 2.084 per cent late on Friday.
With the Mexico dispute seemingly resolved, investors will now focus on whether U.S. President Donald Trump can achieve agreement with China. Trump said on Monday that he was ready to impose another round of tariffs on Chinese imports if he does not reach a trade deal with China’s president at a Group of 20 summit later this month.
In currency trading, the dollar index rose 0.23 per cent, with the euro down 0.15 per cent at $1.1314.
The euro pulled back after sources said European Central Bank policymakers were open to cutting interest rates should economic growth weaken.
The U.S. dollar was down 2.3 per cent against the Mexican Peso, which was at its highest level since May 31.
China’s yuan slipped to its weakest this year after the country’s imports fell the most in nearly three years and as talks to end the Sino-U.S. dispute remained deadlocked.
Spot gold dropped 1.0 per cent to $1,327.21 an ounce, after closing at its highest level since February on Friday.
Oil prices fell more than 1 per cent on Monday as U.S.-China trade tensions continued to threaten demand for crude and as major producers Saudi Arabia and Russia had yet to agree on extending an output-cutting deal.
Brent crude futures fell $1, or 1.6 per cent, to settle at $62.29 a barrel. U.S. West Texas Intermediate (WTI) crude lost 73 cents, or 1.4 per cent, to end at $53.26 a barrel.
U.S. President Donald Trump said he was ready to impose another round of punitive tariffs on Chinese imports if he does not reach a trade deal with China’s president at a Group of 20 summit later this month.
China’s foreign ministry said that China is open for more trade talks with Washington but has nothing to announce about a possible meeting.
China’s crude oil imports slipped to around 40.23 million tonnes in May, from an all-time high of 43.73 million tonnes in April, customs data showed, due to a drop in Iranian imports caused by U.S. sanctions and refinery maintenance.
“As U.S.-China tariff concerns heighten, we see more downward adjustments to world oil demand both across this year and next in providing a limiter on occasional price advances,” Jim Ritterbusch of Ritterbusch and Associates said in a note.