US, Canada, Mexico sign trade deal to replace Nafta
OIL HEADS FOR ITS BIGGEST MONTHLY DECLINE SINCE 2008, WHILE DOLLAR PUSHES HIGHER
US stocks edged higher in early trading, with investors focused on the outlook for trade ahead of a meeting between the American and Chinese presidents. Treasuries edged higher and oil fell.
The S&P 500 Index held on to its largest weekly advance in nine months, sparked largely by a dovish turn from the Federal Reserve. Energy shares weighed on the gauge as oil fell past $50 a barrel, while transportation stocks gained. Trade headlines continued to whipsaw markets, with optimism from Trade Representative Robert Lighthizer providing support for equities. Presidents Donald Trump and Xi Jinping were slated to have dinner yesterday night.
Any sign of a trade truce could tame the greenback’s gains and boost riskier assets including emerging-market currencies and stocks. Trump on Thursday gave conflicting signals on his expectations for reaching a deal with Xi this weekend, as officials work on the contours of an accord that may delay ramping up tariffs on the Asian country in January. Goldman Sachs, however, said an escalation of tensions is the most likely outcome.
“I don’t think that out of the meeting there’s going to come much substance,” Scott Minerd, the chief investment officer at Guggenheim Partners, said on Bloomberg TV. “But there will be a sort of set of principles that will be established to start the process of bringing an end to the trade war.” His firm manages about $265 billion (Dh973 billion).
The first official gauge of China’s economy in November showed manufacturing activity continued to worsen, indicating the authorities will need to keep using stimulus measures as economic growth slows. On Thursday in the US, minutes from the Federal Reserve’s last policy meeting showed the central bank preparing for a more flexible path in 2019.
The US, Canada and Mexico signed a new trade deal championed by President Donald Trump to replace the quartercentury-old Nafta pact, capping a year of intense negotiations and offering a glimmer of certainty amid rising global tensions over trade.
Trump, Canadian Prime Minister Justin Trudeau and outgoing Mexican President Enrique Pena Nieto signed an authorisation for the deal on Friday morning in Buenos Aires on the sidelines of the Group of 20 summit. The three countries sealed the new trade accord a day before Trump is set to meet with Chinese President Xi Jinping to discuss a possible truce in their tit-for-tat trade war.
Oil slides
Oil headed for its biggest monthly decline since 2008 as Russia reiterated it was comfortable with current prices, just a week before it meets with Opec in Vienna to discuss possible production curbs.
“As things stand, the Russians and Saudis are still far from being on the same page over the finer details of looming output restrictions,” Stephen Brennock, an analyst at PVM Oil Associates in London, wrote in a report. “Against this backdrop, the most likely outcome of next week’s Opec meeting is a fudge.”
West Texas Intermediate for January delivery fell 70 cents to $50.75 a barrel on the New York Mercantile Exchange at 8:42am local time, taking WTI’s decline last month to 22 per cent. The contract gained 2.3 per cent on Thursday. Total volume traded yesterday was 25 per cent above the 100-day average.