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LONDON (Reuters) – Optimism over a renewed free trade agreement between the United States, Canada and Mexico and what that could mean for trade relations with other countries has allowed world markets to launch fourth quarter in a positive way.
PHOTO OF FILE: This illustration piece taken in Toronto, Ontario, Canada, on January 23, 2015, illustrates a coin in Canadian dollars, commonly known as the "loonie". REUTERS / Mark Blinch / File Photo
Concerns over Italian policy and Chinese manufacturing tempered optimism, but the last-minute deal to save NAFTA was enough to put global stocks in the dark.
The United States and Canada have saved NAFTA as a trilateral pact with Mexico, saving a $ 1.2 trillion free zone on the verge of collapse after nearly a year. quarter of century.
The Japanese Nikkei N225 rose 0.5% to its highest level in 27 years and European equities have generally increased despite losses on the Italian markets for political reasons.
The Canadian dollar CAD = rose 0.65% against the dollar to its highest level in four months and the Mexican peso MXN = reached its highest level in seven weeks.
"The trade agreement contributes to the appetite for risk, especially the Canadian dollar, and will likely increase the appetite for emerging market currencies at all levels," said Manuel Oliveri, strategist in foreign currency at Credit Agricole in London.
A pan-European equity index rose 0.25%, but concerns about the impact of the Italian government's spending plans on relations with the European Union were dampened.
Italian bond yields rose last week and stocks fell on a report that the EU should reject Italy's budget plans in November and start a procedure against the country's public accounts.
The gap closely observed between Italian and German 10-year bond yields was 270 basis points, more than 30 basis points higher than last week. IT10YT = RR DE10YT = RR
"It is clear that the European Commission will not appreciate (the budget proposal)," said Michael Leister, Commerzbank's interest rate strategist. "Brussels will give its opinion, which we believe will not be positive and … the rating agencies will opt for a similar position.A downgrading is our basic case."
The euro was also hit by an increase in Italy's budget deficit, falling below the EUR 1.16 mark, after having lost 1.2% last week and a peak of 1, $ 18155 reached last week.
Two surveys were also released on Sunday, which showed that growth in the Chinese manufacturing sector fell in September, as both domestic demand and export demand eased.
As a result, the broadest MSCI share index in the Asia Pacific excluding Japan fell 0.25%. Chinese financial markets have been closed for holidays, as has the Hong Kong Stock Exchange.
"The escalating trade tensions between the United States and China have recently weighed on the sentiment of purchasing managers, as evidenced by the lower readings of trade-related subindices," Bank of Canada economists said. America Merrill Lynch in a note.
Oil prices maintained their gains, with the Brent international benchmark briefly hitting its highest level in four years, while US sanctions against Tehran reduced Iran's crude exports, while others Key exporters increased their production.
Brent Crude futures LCOc1 rose 0.6 percent to $ 83.25 a barrel, the highest level since November 2014, before trading at $ 82.72.
Report by Abhinav Ramnarayan, additional report by Hideyuki Sano in Tokyo and Saikat Chatterjee and Virginia Furness in London; edited by Larry King
