By Trevor Hunnicutt
NEWYORK (Reuters) – A major global stock index rose slightly on Wednesday after three straight days of strong gains as investors braced for news on the United States’ trade relations with Canada and China.
Talks to renew the North American Free Trade Agreement (NAFTA) hinge on Canada after Monday’s deal between the other parties to that pact, the United States and Mexico.
Investors are also nervous ahead of a deadline for the next round of China-U.S. tariffs next week.
MSCI’s world equity index, which tracks shares in 47 countries, ticked up 0.2 percent. The index closed higher on Tuesday but off the 5-1/2-month high hit soon after Mexico and the United States struck their deal <.MIWD00000PUS>.
The Dow Jones Industrial Average <.DJI> rose 22.18 points, or 0.09 percent, to 26,086.2, the S&P 500 <.SPX> gained 10.99 points, or 0.38 percent, to 2,908.51 and the Nasdaq Composite <.IXIC> added 55.61 points, or 0.69 percent, to 8,085.65. “The market is quite right to say after the knee-jerk reaction higher in the Mexican peso and equities, a) there was remarkably little detail, and b) what is the state of Canada?” said Aberdeen Standard Investments head of global strategy Andrew Milligan.
U.S. President Donald Trump threatened to proceed with Mexico alone and levy tariffs on Canada if it does not come on board with revised trade terms. But a trade deal might struggle to win approval from Congress unless Canada comes on board.
“The final decisions are unlikely until 2019 at the earliest,” Goldman Sachs analysts wrote in a note to clients, saying Democrats might gain control of the majority in Congress by then, which could make agreement more difficult.
The dollar, which has been a safe haven from trade concerns, turned negative after earlier gains. An index of the U.S. currency against several trading partners <.DXY> fell 0.08 percent. The Mexican peso <MXN=> lost 0.11 percent versus the U.S. dollar, while the Canadian dollar <CAD=> ticked down 0.09 percent versus the greenback.
On another front of the global trade conflicts, a deadline for public comment on Trump’s increased tariffs on $200 billion of Chinese goods was less than a week away on Sept. 5. The White House has said it wants to settle NAFTA before negotiating with China.
“There’s a big debate taking place among investors: is Trump hoping to reach agreement with all the big players to demonstrate what a successful negotiator he is, or is he trying to make sure he’s got agreement with NAFTA and the EU and therefore can turn all the firepower on to China?” said Milligan.
Emerging market stocks <.MSCIEF> under pressure from trade concerns and a stronger dollar this year lost 0.10 percent on Wednesday, while an index of their currencies <.MIEM00000CUS> fell 0.37 percent in dollar terms.
Turkey’s lira <TRY=> extended losses to a two-week low, down 1.89 percent against the dollar, as concern grew about the effects of the country’s currency crisis, and Finance Minister Berat Albayrak was quoted as saying he did not see a risk to the economy. Dollar-denominated Turkish bank bonds also fell after Moody’s sounded the alarm over the sector.
Oil prices rose on news of a fall in Iranian crude supplies as U.S. sanctions deter buyers. Brent <LCOcv1> was last at $76.31, up 0.47 percent on the day. [O/R]
Global asset performance Aug 29 – https://reut.rs/2LAbPsC
(Reporting by Trevor Hunnicutt; Additional reporting by Wayne Cole and Helen Reid; Editing by David Gregorio)