Mexico’s president says it will ratify the new NAFTA trade deal next week, as markets turned ebullient over the deal between the U.S. and Mexico that averts trade tariffs.
The Trump administration had been set to apply a five per cent tariff across the board on all Mexican imports, starting Monday, if Mexico did not take measures to stem the flow of migrants across the U.S. border. Hurried talks between Mexican and U.S. officials resulted in a deal announced late Friday to avert the tariffs.
That removed a major risk for many U.S. companies, which have integrated supply chains that involve parts or assembly in Mexico.
Stocks move higher
Stock markets responded by jumping higher, with the Dow up 174 points to 25,157, the broader S&P index up 25 to 2,898 and Nasdaq up 134 points to 7,875. Auto makers and chipmakers saw strong gains.
Several megadeals also helped buoy stocks. Industrial giant United Technologies is merging with defence contractor Raytheon in a deal that will create a defence contracting powerhouse with more sales than rivals Lockheed Martin and Northrop Grumman.
Meanwhile, customer-management software developer Salesforce is buying data analytics company Tableau Software in an all-stock deal valued at $15.7 billion US.
The deal over immigration with the U.S. was a relief for Mexico, which, like Canada, recently saw the lifting of U.S. tariffs on its steel and aluminum sector.
President Andrés Manuel López Obrador announced Monday that Mexico’s Senate would hold an extraordinary session in a week’s time to ratify the new Canada-U.S.-Mexico Agreement.
“I can assure you that next week, the Senate will ratify this,” he said, expressing the hope this would encourage the U.S. and Canada to ratify the free trade deal.
Over the weekend, the G20 financial ministers expressed their concern over “intensifying” trade and geopolitical risks.
Oil at $54 amid doubts over global growth
The U.S.-China trade war still hangs over the markets and is putting a cap on global growth.
The price of oil is well below the $65 it had achieved a month ago. West Texas Intermediate, the benchmark North American contract, was trading up 14 cents at $54.13 US a barrel on Monday at midday.
Toronto’s main stock index, the TSX was up 21 points at 16,252, responding to both the wavering fortunes of oil and a decline in the price of gold.