Monday October 1st

1-10-2018

Dow is set to surge more than 200 points after the US and Canada secure a deal to replace NAFTA

U.S. stock-index futures skyrocketed ahead of Monday's open as investors cheered news of Canada joining a trade deal with the United States and Mexico. Around 7 a.m. ET, Dow Jones Industrial Average futures rose 211 points, indicating a gain of 216.69 points. S&P 500 and Nasdaq 100 futures also pointed to strong gains at the open. Canada and the U.S. secured a trade deal to replace the current North American Free Trade Agreement (NAFTA). The new accord is expected to be named the United States-Mexico-Canada Agreement, or "USMCA" for short, according to a senior U.S. administration official. The agreement will deliver more market access to U.S. dairy farmers, while Canada has effectively capped automobile exports to the States. Both nations, along with Mexico – which agreed to a deal earlier this year – are expected to sign the agreement by the end of November. It would then be passed to Congress. Shares of Ford and General Motors both jumped more than 1 percent in the premarket following the news. Boeing and Caterpillar, stocks that are also sensitive to trade news, rose 1.1 percent and 0.9 percent, respectively. The moves on Wall Street came as some markets in Asia and most markets in Europe cheered the positive news. In addition, futures appeared to be building upon Friday's strong gains, when theS&P 500 achieving its best quarter since 2013, having risen 7.2 percent during July to September. Data due Monday include manufacturing purchasing managers' index figures at 9:45 a.m. ET, followed by ISM manufacturing data and construction spending, both due at 10 a.m. ET. Investors are also keeping a close eye on Tesla, after news emerged that CEO Elon Musk had settled charges with the Securities and Exchange Commission over his recent aborted bid to take the firm private. Over the weekend, news emerged that Musk would relinquish his position as chairman of the board at Tesla for at least three years and that, as part of the settlement, Tesla and Musk would pay $20 million each. Tesla shares jumped more than 15 percent on the news. Meanwhile, General Electric surged 16 percent after the company abruptly removed CEO John Flannery from his post and named Lawrence Culp as his successor. Asia markets were mixed on Monday as the U.S. and Canada announced that they had reached a deal to replace the North American Free Trade Agreement. The Nikkei 225 ended the trading day higher by 0.52 percent at 24,245.76 while the Topix recovered to close largely flat at 1,817.96. In South Korea, the Kospi recovered partially from its losses but still closed lower by 0.18 percent. The Chinese and Hong Kong markets were closed on Monday. Brent crude oil hovered close to its highest since November 2014 on Monday, supported by supply concerns before U.S. sanctions against Iran come into force next month. Benchmark Brent crude oil futures rose 36 cents to $83.09 at 8:36 a.m. ET (1236 GMT), having touched their highest in almost four years at $83.32. U.S. West Texas Intermediate (WTI) crude futureswere up 20 cents at $73.45 a barrel. Gold prices dipped on Monday as the dollar firmed in the wake of indications from the U.S. Federal Reserve last week that it will pursue a tighter monetary policy. The Fed raised U.S. interest rates last week and said it planned four more increases by the end of 2019 and another in 2020, amid steady economic growth and a strong job market. Higher U.S. interest rates tend to boost the dollar and push bond yields up, putting pressure on gold prices by increasing the opportunity cost of holding non-yielding bullion. Spot gold was down 0.3 percent at $1,188.41 at 0407 GMT. On Friday, gold touched its lowest since Aug. 17 at $1,180.34 an ounce. U.S. gold futures were down 0.3 percent at $1,192.30 an ounce.