European Markets Boosted by Progress in NAFTA Talks
European shares climbed after a market-friendly speech made by U.S. Fed Chairman Jerome Powell. Earlier he emphasised that US interest rate increases are likely to be gradual. Investors also appreciated the signs of progress on a U.S.-Mexico NAFTA trade deal. The pan-European STOXX 600 rose 0.3 percent, Germany's DAX was up 0.4 percent. Auto stocks were the strongest performers after U.S. President Donald Trump said the day before that a trade deal with Mexico was near.
The Mexico-U.S. discussions are going on in Washington. The sides focus on crafting new rules for the automotive industry. U.S. President Donald Trump used to call the 24-year-old NAFTA pact a "disaster" for American workers. The American side is the most active in its desire to rework the deal. It seems the US and Mexico are nearing an agreement on autos, and a source close to the negotiations said at the weekend there was now "little" separating the two.
According to experts, the biggest risks the market were facing were trade wars. Thus, any reduction in trade war risk such as NAFTA talks will push U.S. shares higher and will support markets. The German carmakers rely heavy on smooth trade between Mexico and the U.S. Germany is very much eager to sell vehicles made in Mexican manufacturing plants into the U.S. market.