Australian shares appear set to extend a four-session run higher, tracking
positive sentiment in global markets after a long weekend.US stocks advanced overnight
on relief the White House had backed away from a threat to hit Mexico with trade tariffs.
Local futures hint at an opening gain of about 0.3% after the S&P/ASX 200 finished last
week at 6443.9, up 1% on Friday and 0.7% over the week. The promise of easing trade
tensions bolstered sentiment in commodity markets, with industrial metals up strongly,
although energy stocks lack a tailwind after crude prices reversed some of the strong
gains of late last week. The NAB business survey is out before midday, and two central
bank assistant governors are scheduled to speak over the course of the day.
U.S. stocks climbed, buoyed by relief over the White House’s decision to drop a threat
to hit Mexico with tariffs on billions of dollars of goods.
Treasury yields and shares of manufacturers and technology firms rose after President
Trump said tariffs on Mexican imports, which had been set to go into effect Monday, had
been “indefinitely suspended.”
Worries about the U.S.’s trade fight with China and more recently, Mexico, had sent
stocks swinging and bond yields falling well below the highs they hit last year. The deal
that Mexico and the U.S. struck late last week to avert tariffs helped reassure investors
that trade tensions between the two countries are winding down for now.
The Dow Jones Industrial Average climbed 78.74 points, or 0.3%, to 26062.68, notching
its sixth consecutive session of gains–its longest such streak since May 2018. The S&P
500 added 13.39 points, or 0.5%, to 2886.73 and the Nasdaq Composite advanced 81.07
points, or 1%, to 7823.17.
Financial shares helped lead the broader market higher Monday, with Goldman Sachs
jumping $4.31, or 2.3%, to $194.12 and Morgan Stanley adding 59 cents, or 1.4%, to
$43.29. Rising bond yields tend to help lenders, since they increase the gap between what
banks charge borrowers and what they pay depositors.
Gold futures dropped to mark their first loss in nine sessions after encouraging global
trade headlines drove investors away from the metal and into perceived riskier assets
such as stocks, and the U.S. dollar climbed.
August gold fell $16.80, or 1.3%, to settle at $1,329.30 an ounce, after gaining
roughly 2.7% last week, its biggest weekly rise since March 23, 2018, according to
FactSet data, based on the most-active contracts. Most-active contract prices settled
Friday at the highest since Feb. 20. The metal’s decline Monday followed a run of nine
consecutive session gains–the longest since January 2018.
July silver fell 39.2 cents, or 2.6%, to $14.639 an ounce, after adding 3.2% last week.
July copper rose 1.3% to $2.662 a pound. July platinum fell 0.1% to $805.20 an ounce.
September palladium tacked on 2.3% to $1,386.80 an ounce.
U.S. benchmark oil prices fell, reversing some of Thursday’s and Friday’s sharp gains, on investor caution over a possible U.S. economic slowdown and uncertainty regarding an upcoming OPEC meeting to discuss production cuts.
Oil prices began to rebound late last week after falling briefly into a bear market
Wednesday on worries about bulging U.S. inventories of crude oil, which are at a 22-month high of 483 million barrels. But a weak U.S. jobs report Friday has investors again worrying about slackening demand
The peso strengthened 2.1% against the U.S. dollar as markets welcomed a deal on
migration that averts the imposition of import tariffs on all Mexican exports to the U.S.
The peso was quoted in Mexico City at 19.22 to the dollar, compared with 19.62 Friday.
“The tariffs issue is likely not dead, just dormant,” Goldman Sachs said. “Lingering
uncertainty with regards to the terms under which Mexican exporters can access the U.S.
market is likely to impact domestic investment decisions and foreign direct investment
inflows, and through them intensify the headwinds to an economy that has been
The benchmark IPC stock index closed up 0.7% at 43609.