US stocks hit records; Mexico’s peso rises on new trade pact

Bloomberg

US stocks added to all-time highs, and Mexico’s peso rallied versus the dollar as the Trump administration closed a bilateral trade deal with America’s southern neighbor. Treasuries fell.
The S&P 500 Index rose as President Donald Trump unveiled details of the agreement that he says will replace Nafta. The peso rallied Mexico. European shares advanced, though a British holiday depressed volume. The strongest moves were in Asia after recent efforts by the Chinese central bank to shore up the yuan. That currency was largely stable in the offshore market as the dollar turned lower. The euro reversed a drop after a jump in German business confidence.
Macro developments continue to blur the narrative for financial markets, with reports of a potential breakthrough on Nafta offset by yet another failure for US and China trade talks. American stocks are trading at a record off the back of strong earnings and domestic expansion, but President Donald Trump’s ongoing legal woes, fresh Russian sanctions, a war of words over Syria and faltering efforts to denuclearise North Korea all threaten to act as a drag on risk appetite.
Investors seem unlikely to find many clues on the outlook in Monday’s depressed trading. While Asian shares rallied on the back of the yuan’s stabilisation, the PBOC’s moves to steady the currency threaten to be an unwelcome step backward in the longer term. Federal Reserve Chairman Jerome Powell’s indication the US will continue to follow a path of gradual tightening was interpreted as having a dovish tone by some, further complicating the macro picture.
Elsewhere, European bonds followed Treasuries lower. The Mexican peso climbed after people familiar with discussions said a Nafta deal with the US could come as soon as Monday. Turkey’s lira dropped as the country’s markets reopened following a holiday. Emerging-market stocks rallied. Oil was little changed.
Earnings are due from companies including Canada’s largest banks and China Construction Bank Corp., ICBC, Pernod Ricard and Dollar General. China’s official factory PMI are due on Friday.
The US economy probably grew in the second quarter at a slightly slower pace, economists predict ahead of Wednesday’s report. The Bank of Korea sets policy on Friday. Weak jobs growth has cooled speculation of an interest-rate increase.
The S&P 500 increased 0.7 percent in New York to the highest on record. The Dow Jones Industrial Average rose 0.9 percent to surpass 26,000. The Stoxx Europe 600 Index gained 0.4 percent to the highest in almost two weeks. The MSCI Asia Pacific Index increased 1.2 percent to the highest in two weeks on the biggest climb in more than 11 weeks. The MSCI Emerging Market Index gained 1.8 percent to the highest in two weeks on the largest rise in more than six weeks. The Bloomberg Dollar Spot Index declined 0.4 percent to 1,178.53. The peso rose more than 1 percent to 18.66 per dollar. The euro increased 0.1 percent to $1.1677. The Japanese yen rose 0.1 percent to 111.06 per dollar.
The yield on 10-year Treasuries rose two basis points to 2.83 percent. Germany’s 10-year yield rose two basis points to 0.37 percent. The spread of Italy’s 10-year bonds over Germany’s dipped one basis point to 2.7988 percentage points. West Texas Intermediate crude gained less than 0.05 percent to $68.75 a barrel.