Mexico-focused ETFs gained on news that the United States and Mexico have officially struck a deal, effectively revamping the current North American Free Trade Agreement. The iShares MSCI Mexico Capped ETF (NYSEArca: EWW) gained 2.86%, Direxion Dly MSCI Mexico Bull 3X ShsETF (NYSEArca: MEXX) jumped 9.46% and Franklin FTSE Mexico ETF (NYSEArca: FLMX) was 1.23% higher.
All three ETFs are in the green year-to-date with EWW up 6.82%, MEXX up 7.72% and FLMX up 7.07%. The Dow Jones Industrial Average climbed over 250 points following the new trade deal announcement.
“It’s a big day for trade,” said U.S. President Donald Trump at an Oval Office announcement. “It’s a big day for our country.”
According to President Trump, the deal would effectively eliminate the NAFTA name and would now be called The United States-Mexico Trade agreement. The Trump administration was pushing for a revamp of the NAFTA agreement prior to December 1 when Mexico turns over its leadership to the incoming administration of President-elect Andrés Manuel López Obrador.
With the differences ironed out with Mexico, the focus now shifts to other NAFTA member Canada.
“Progress between Mexico and the United States is a necessary requirement for any renewed NAFTA agreement,” said Adam Austen, a spokesman for Canadian Foreign Minister Chrystia Freeland. “We are in regular contact with our negotiating partners, and we will continue to work toward a modernized NAFTA. We will only sign a new NAFTA that is good for Canada and good for the middle class. Canada’s signature is required.”
Related: Trying Times for Mexico ETF
Mexico just recently changed leadership, opting to elect controversial leftist candidate Obrador as its next president. Obrador’s election sparked controversy, but public opinion may be swaying towards his side as the LA Times reported that “little more than a week he has gone from being denounced as a looming threat to stability, a Mexican incarnation of the late Venezuelan leftist firebrand Hugo Chavez, to being the darling of Mexico.”
With trade concerns weighing on the minds of investors, one key driver was how Obrador’s relationship with U.S. President Donald Trump would play out. The U.S. imposed duties on aluminum and steel, affecting NAFTA members that include Mexico.
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