A deal last week between the United States and Mexico has suspended U.S. President Donald Trump’s planned tariffs on Mexican imports, sending global markets higher on Friday on Wall Street and into Monday’s Asian trading session. Asian benchmark indexes were broadly higher on Monday, with Japan’s Nikkei 225 surging 1.20 percent as of 2:15 p.m. HK/SIN. South Korea’s Kospi saw similar gains, trading up 1.15 percent, while Hong Kong’s Hang Seng Index soared 2.16 percent higher in the mid-afternoon. China’s benchmark indexes, the Shanghai Composite and the Shenzhen Composite were up 0.71 percent and 1.24 percent respectively.
The gains in Asia followed a strong close on Wall Street on Friday which saw all three benchmarks close up more than 1 percent. The NASDAQ saw the strongest gains, closing the session up 1.66 percent. The S&P 500 gained 1.05 percent and the Dow Jones Industrial Average gained 1.02 percent for the day. The gains are expected to extend into today’s New York trading session.
Gold Takes a Hit
Gold prices plunged to $1,328.08 per ounce on Monday morning before rebounding slightly to $1,331.50 per ounce as traders shed the safe-haven asset in light of renewed hopes that a trade deal between the U.S. and Mexico can signal possibility for a deal between the U.S. and China as well. Also pressuring gold prices was the renewed possibility that the U.S. Federal Reserve could cut interest rates in the coming months, a move that would make it more expensive to hold gold.
According to The Guardian, President Trump has retained the authority to impose tariffs against Mexico if the country does not comply with its part of the deal. U.S Treasury Secretary Steven Mnuchin commented that “Our expectation is that Mexico will do what they’ve committed to do and our expectation is that we won’t need to put tariffs in place, but obviously if that’s not the case, the president retains that authority.”
In a joint statement, both countries confirmed that Mexico will immediately expand its border program that sends asylum-seekers back to Mexico while they await adjudication. Mexico also agreed to deploy national guard troops to its southern border to reduce the flow of migrants to the U.S. and to crack down on human smuggling.