Markets welcome Trump's new US-Mexico trade deal - as it happened
Agreement eases uncertainty but president threatens tariffs on Canada if it does not sign up
2.15pm BST
News of the US-Mexico trade deal has lifted European markets, albeit the gains are limited by concerns about the other big disputes that President Trump has embarked upon, notably with China.
And the fact that Canada has not yet joined the new version of the North American Free Trade Agreement is another reason for caution.
1.47pm BST
Germany is considering giving financial aid to struggling Turkey, to avoid a full blown economic crisis in the region, the Wall Street Journal is reporting. The full story is here ().
1.18pm BST
Elsewhere here's an OECD chart from economist Rupert Seggins showing how a number of countries have performed in the second quarter in terms of GDP growth:
Quick update: 25 OECD countries have reported GDP growth figures for Q2 2018. Chile & Poland out in front with 5.0%y/y & Denmark down the bottom with 0.8%y/y (something is rotten etc. etc.). UK's 1.3%y/y currently good enough for joint 4th from last place. pic.twitter.com/e8UaE4qiXx
1.13pm BST
US Treasury secretary Steve Mnuchin says he hopes Canada will join the Mexico-US trade deal but if not the two will go it alone. The comments came in a interview on CNBC:
"I don't anticipate there's going to be a lot of sticking points," Treasury Sec. Mnuchin says of upcoming U.S.-Canada trade negotiations. He says he hopes Canada gets on board, but if not, the U.S. is prepared for a Mexico-only deal. pic.twitter.com/5v6ygVab3H
1.06pm BST
The pound may be falling against the euro on yet more Brexit fears, down 0.13% at a1.1022, but it is managing to move higher against a weaker dollar.
The US currency is out of favour as investors turn away towards riskier bets following the US-Mexico trade deal. So the pound is up 0.21% at $1.2918.
The FTSE100 is holding its post-Bank holiday jump above 7585, but back from its 7640 best of the day. Helping risk appetite are Miners welcoming fresh USD weakness, giving metals prices a boost, coupled with a US-Mexico trade deal offering hope that Trump's trade deficit spat with Beijing could calm. Hindering the index is GBP strength vs USD, sending several defensives lower, and eclipsing higher Oil prices to keep heavyweight Energy shares offside.
12.25pm BST
If Donald Trump's not-NAFTA deal works, he is unlikely to change strategy in the other trade disputes, says Craig Erlam, senior market analyst at Oanda:
While I'm sure investors would rather the deal include Canada and preserve NAFTA, this is at least a step in the right direction and could be an important first step towards it. US President Donald Trump may have rebranded the agreement as the United States - Mexico Trade Agreement due to the apparent negative connotations associated with NAFTA but I think this may be yet another attempt to drag Canada to the negotiating table and align themselves with his idea of how it should look.
Trump has made renegotiating trade deals a key feature of his presidency and is willing to do whatever it takes in order to get what he wants. So far, he has had limited success with China, the EU and his NAFTA partners but coming ahead of the midterm elections, this could be viewed as an important success. While the US consumer may be the primary loser in his approach and the outcome of it due to the impact it has on prices, he is receiving credit for fighting to preserve skilled US jobs.
11.32am BST
Here's an interesting report from the London Evening Standard.
Bank of England governor Mark Carney has apparently been asked to stay on by the government for an extra year, until 2020, the paper says, so he can give some continuity as the country stumbles its way through Brexit.
10.33am BST
US markets are expected to continue their positive run when trading begins, with the futures pointing to a 40 point or so rise on the Dow Jones Industrial Average. Chris Beauchamp, chief market analyst at IG, said:
Indices are steady this morning after the long weekend for the UK, but the new highs in the US have not emboldened buyers this side of the Atlantic. In the short run, the market is a momentum machine, and this is being clearly demonstrated as the US market diverges from Europe, leaving the FTSE and others trailing far behind.
Still, progress on trade talks is welcome for all concerned, since it shows that the Donald can be persuaded if the right approach is used. Trade negotiators around the globe will be studying the US/Mexico talks for tips on how to get on the president's good side. Further dollar weakness is continuing to bolster the euro and sterling, providing another headwind for European stocks to deal with. But with US GDP tomorrow and non-farms coming up next week this near-term weakness in the greenback may soon reverse - and while this will help the FTSE on the sterling front, a higher dollar will hit commodity prices, limiting potential upside for the index, suggesting those looking for gains will keep their money stateside.
9.50am BST
Over in the eurozone, Italian 10 year government bond yields have hit a three month high on worries about the country's spending plans and its debt levels.
Italian deputy prime minister Luigi Di Maio told the Il Fatto Quotidiano today that its public deficit could top the EU's ceiling of 3% of GDP next year. Jim Reid at Deutsche Bank said:
Italian politicians seems to have continued to escalate their rhetoric regarding potential budget conflict with the European Union. Deputy Prime Minister Di Maio, leader of the Five Star Movement, said that Italy has no intention of withdrawing from the union or the currency zone, but that "we will look at all measures in discussions regarding the European budget and will block what doesn't work for us." The other Deputy Prime Minister, from the Northern League, Matteo Salvini, echoed Di Maio's sentiments, saying "it's time to cut financing to a useless entity." The principle point of contention is immigration policy, with Italian leaders arguing that the rest of Europe needs to do more to assist Italy with their influx of migrants.
No risk-on for Italy, bond yields at highest since early June as autumn of discontent begins... pic.twitter.com/mWPF4rUnjp
8.57am BST
The US-Mexico deal is welcome but gives little indication as to the outcome of the current dispute between Trump's government and China, suggests Alejo Czerwonko, emerging market strategist at UBS Global Wealth Management:
Today's developments constitute a step in the right direction towards a revamped and modernized NAFTA. The road to a final agreement remains rocky. Several thorny issues must still be ironed out once Canada joins discussions. The most important of these involve the dispute resolution mechanism, government procurement, and agriculture. In addition, a final deal will have to be approved by each country's legislature. Although the exact timing is uncertain, we expect the countries to ultimately reach a trilateral deal, avoiding the serious consequences that would have resulted from President Trump carrying out his threat to withdraw from NAFTA...
Importantly, we warn against extrapolating NAFTA optimism to the realm of US-China bilateral relationships. Trump administration documents demonstrate that current concerns about China reach beyond the narrow issue of trade, suggesting they are not going to dissipate easily. We recently reduced the size of our overweight position in global equities, bringing our overall global tactical asset allocation stance to broadly neutral.
A key reason for our risk reduction was our view that the market was not pricing in the increased risk of the US-China tariff issue. Talks between China and the US have yielded little progress in recent days, and the US is still on track to impose 10-25% tariffs on $200bn of trade with China, and has threatened more.
8.39am BST
Comments from UK prime minister Theresa May on a no-deal Brexit have also done the pound little favours, says Connor Campbell, financial analyst at Spreadex, while Chinese concerns have tempered the market enthusiasm for the Mexico deal:
Though tentatively positive, the European markets hardly went doolally for Donald Trump's trade deal with Mexico, any good will tempered by a) the unresolved, and tense situation with Canada, and b) the even more unresolved, and even more tense situation with China.
The FTSE, somewhat playing catch-up after Monday's Bank Holiday, jumped 0.6% after the bell, striking 7625 for the first time in nearly a fortnight. The miners played a key role in driving the UK index higher, having been something of a pest for the FTSE in recent weeks, with added gains in the banking sector.
8.34am BST
After a long weekend in the UK, traders have pushed the pound down to a one year low against the euro on continuing fears of a no-deal Brexit.
Among the headlines prompting concern, French prime minister Edouard Phillipe has reportedly asked ministers to prepare contingency plans for no deal. So sterling fell to a 12 month low of 90.73p although it has recovered slightly to 90.60p, down 0.01%.
8.17am BST
As expected, the US-Mexico deal has eased some of the trade tensions which have been building up for months now thanks to Donald Trump's confrontational approach to the issue.
So the FTSE 100 is up 0.56%, Germany's Dax is 0.3% better and France's Cac has climbed 0.2%. Continuing worries about the stand-off with China however are likely to limit the gains.
7.46am BST
Here are IG's opening calls for Europe:
European Opening Calls:#FTSE 7626 +0.64%#DAX 12570 +0.25%#CAC 5490 +0.20%#MIB 20808 +0.05%#IBEX 9674 +0.14%
Traders are still mindful that the US-China talks last week didn't achieve much. It would appear that the trade spat will rumble on and there is chatter in the markets that the US is eyeing up another round of tariffs on Chinese goods, but this time it could be up to $200 billion worth of Chinese imports. The US department of agriculture has plans to financially support farmers who have been targeted by Beijing's tariffs, and this initiative suggests how determined Washington DC is to maintain a hard-line.
7.42am BST
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
For once there is some positive news on the US and trade. Having gone toe to toe with China and Europe over tariffs, President Trump has now agreed a new trade deal with Mexico (despite the wall he is so keen to build between the two countries).
We'll get rid of the name Nafta. It has a bad connotation because the United States was hurt very badly by Nafta for many years and it's now a really good deal for both countries...I think it is one of the largest trade deals ever made - maybe the largest trade deal ever made.
US President Trump declared an end to NAFTA and proposed a not-NAFTA deal with Mexico (which looks a lot like NAFTA). Canada is not yet included, and effectively has until Friday to sign up.
Markets have treated this as progress, and a sign that the free trade system on which US companies depend will not be abandoned. Details do remain limited - it is hard to fit the complexities of a trade deal into a tweet. However, this is not risk free. Not-NAFTA will require Congressional approval, and without Canada, fast track authority probably cannot be used.
London returns from a three-day weekend and the FTSE has some catching up to do after a positive close for European markets on Monday. A strong finish in the US amid better news on trade is setting Europe up for a higher open...
If the deal with Mexico is a sign of things to come, emerging markets are more attractive from a valuation standpoint- but the US still has all the momentum. There is clearly bemusement amongst many economists that the rising tariffs are not causing greater concern for US investors. We think, from the beginning it has been clear investors believe there can only be one winner any these disputes and that is the US. While emerging markets, including China have fallen into bear market territory, the record US bull market presses onwards.
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