Here are the top five things you need to know about the financial markets on Monday, June 10:
The us president, Donald Trump, has announced an agreement with Mexico that would put a brake to customs duties of 5% on goods from mexico, which were to take effect Monday.
Trump, who had threatened to increase the tariffs on the Mexico if the country was not working harder to prevent the immigrants settle in the United States, said he now had “full confidence” in the co-operation of Mexico.
The mexican peso was up 2% versus the dollar following the news, even if few details on the agreement have been published, particularly on the issue of whether Mexico has pledged to buy more us agricultural products, or of beef, and increase surveillance of its southern border with Guatemala.
Trump has indicated that the implementation of the tariffs would remain an option if the cooperation was not as expected, but he stressed that he does not think they will be necessary.
Global equities have recorded solid gains on Monday as markets cheered the decision to Trump to suspend tariffs on mexican products.
Even if the United States is still involved in a trade dispute with China, the agreement with Mexico offered a sign of relief to markets concerned about the fact that the business tactics, aggressive Trump could lead to a global recession.
Asian equities and european equities rose by around 1%, although the stock markets of australia, germany and switzerland are closed for a holiday.
Futures americans report lower gains at the open, retreating from their best ascension weekly since November. Wall Street finished Friday up 1% while employment report was weaker than expected has raised hopes that the Federal Reserve réduisse its rates this year. The Dow futures gained 82 points, or 0.3% at 11h26, future S&P 500 rose 9 points, or 0.3%, while futures Nasdaq 100 gained 26 points, or 0.4%.
Despite the positive news of the trade agreement the us-mexico, Washington and Beijing have been locked away in a battle that may not be relieved until at least the end of the month.
The us Treasury secretary, Steven Mnuchin, told CNBC in an interview that Trump would decide whether it is appropriate to set additional duties on China after his meeting with the chinese president Xi Jinping at the G20 summit scheduled for the end of the month. Mnuchin said that the president could impose at Beijing new rates, if the meeting went badly.
The financial managers of the g-20 met over the weekend warned that the intensification of trade tensions and geopolitical constituted the main risk for the stabilisation of global growth.
Data released overnight showed that China’s exports returned to growth in unexpectedly, but some analysts believe that manufacturers are likely to have increased their deliveries, in order to avoid the last round of the american tariff on $ 300 billion of chinese products. Chinese imports have, however, recorded their biggest decline in nearly three years, which is another sign of weak domestic demand in the world’s second largest economy.
United Technologies (NYSE: UTX) and Raytheon (NYSE: RTN) have agreed to a merger that would create a giant of the aerospace and defence worth about $ 121 billion, the largest transaction ever made in the sector.
The companies are likely to argue that their overlap is limited in order to avoid criticism of the authorities of antitrust regulations, even though Boeing (NYSE: BA), Airbus and the Pentagon should raise objections.
The transaction is expected to be concluded during the first half of 2020 when United Technologies has completed the spin-off of its business of air conditioners at Carrier and Otis elevators.
The price of oil rose Monday, while a commitment of Saudi Arabia and Russia to extend their action of coordination in order to balance markets, a decline in drilling activity in the United States and an agreement between the United States and Mexico have largely offset concerns about the global economy.
The saudi minister of Energy, Khalid al-Falih, said that it was close to an agreement to extend the agreement for reduction of production between OPEC and allies that are not members, led by Russia, while his Russian counterpart, Alexander Novak, said that they have agreed to take co-ordinated measures.
The decision to Trump to cancel the customs duties on mexican products has also helped to dispel the concerns raised by the escalation of trade tensions that threaten to derail the economy and hurt demand for oil.
Data from Baker Hughes released late Friday also showed that the number of drilling activity, considered as an indicator of future production, dropped to the lowest since February of 2018 at the previous week.
The futures on the crude oil US have gained 30 cents, or 0.6%, to 54,29$ to 11: 30 am, while the Brent oil rose 29 cents, or 0.5%, to 63,58$.