World stocks rose to a six-month high on Tuesday, lifted by investor optimism that a U.S.-Mexico deal to overhaul the North American Free Trade Agreement will go some way to averting a global trade war.
Some of the previous day’s buoyant mood was starting to ebb, however, on uncertainty over whether Canada would agree to the new terms of the three-nation pact. Pressure is heavy on Ottawa to join the agreement, with talks due for later on Tuesday
Monday’s news of the U.S.-Mexico deal had pushed the S&P 500 and Nasdaq indexes to fresh records, and on Tuesday, Europe and Asia followed Wall Street’s lead, inching to multi-month highs.
Wall Street was set to open slightly higher again, futures markets signaled, while the dollar slipped to a four-week low. Implied volatility across currencies and equity markets also eased, as investors took on greater risk. Emerging market stocks hit their highest since Aug. 9.
“Global trade tensions have undoubtedly been the most significant source of risk in 2018,” said Hussein Sayed, chief market strategist at FXTM.
“The U.S.–Mexico deal seemed to boost confidence that the trade war is moving closer to an end, and the next question is who’s next to close a deal with Trump?” he said.
MSCI’s benchmark world share index followed on from Monday’s best performance in over four months, rising 0.15 percent.