Monday August 27th

27-08-2018

Dow set to rise more than 100 points amid US-Mexico trade progress

U.S. stock index futures rose on Monday as the United States and Mexico drew closer to a deal on NAFTA. Investors also digested reassuring comments from Federal Reserve Chair Jerome Powell on the central bank's policy-tightening path. Dow Jones Industrial Average futures traded 127 points higher, indicating a gain of 131.15 points, while S&P 500 and Nasdaq 100 futures also pointed to an upbeat start to the session. Mexican Economy Minister Ildefonso Guajardo said Sunday both countries were close to resolving key differences on trade. This would pave the way for a new deal between the two longtime trade partners. "We've continued making progress," Guajardo said. CNBC also reported, citing a Mexican official, that talks had concluded and a NAFTA announcement could come later on Monday. Shares of Caterpillar and Boeing rose 0.6 percent and 0.7 percent, respectively, before the bell. Their stocks are considered trade bellwethers because of their large exposure to overseas markets. Shares of Ford, General Motors and Fiat Chrysler also rose in the premarket. The Mexican peso rose 0.9 percent against the dollar. Investors have been grappling with trade worries over the past few months as the U.S. takes a more protectionist stance on the matter. The U.S. has slapped tariffs on billions of dollars worth in Mexican and Chinese imports, to which Mexico and China have retaliated. Global markets were also buoyed by news from Friday that the Fed's Powell sees "further, gradual" rate hikes ahead. The Fed chief said at the Jackson Hole Symposium in Wyoming that the central bank would likely continue with its policy tightening if the economy continued to strengthen. Powell's comments lifted the S&P 500 and Nasdaq composite indexes to record highs in Friday's trading session. In Europe, the Stoxx 600 index rose 0.3 percent on Monday, while the German Dax climbed half a percent. In Asia, China's central bank, the People's Bank of China (PBOC), reintroduced a policy adjustment aimed at supporting the yuan. The move, coupled with Powell's comments, sent the Shanghai Composite up by 1.9 percent overnight. Hong Kong's Hang Seng index rose by 2.18 percent as of 3:10 p.m. Japan's Nikkei 225 was up by 0.88 percent to close at 22,799.64, with almost all sectors ending the trading day in positive territory. South Korea's Kospi rose 0.27 percent to close at 2,299.3. Oil prices steadied on Monday amid concerns the U.S.-China trade dispute will erode global economic growth, although looming U.S. sanctions against Iran's oil sector continue to support the market. International Brent crude oil futures rose 16 cents to $75.98 per barrel by 8:28 a.m. ET (1228 GMT). U.S. West Texas Intermediate (WTI) crude futures were up 8 cents at $68.80 a barrel. Trading activity was limited due to a public holiday in Britain, traders said. Gold prices held steady on Monday after seeing their best gain in over a year the session before, boosted by short-covering and as comments from the head of the U.S. Federal Reserve signalling a gradual approach to interest rate hikes weighed on the dollar. Spot gold was up 0.1 percent at $1,206.34 per ounce by 0420 GMT. It had climbed 1.7 percent on Friday in its biggest one-day percentage gain since May 2017. U.S. gold futures were down 0.1 percent at $1,212.70 an ounce.