Following Labor Day weekend, all major U.S. indexes started in the red with the Dow Jones Industrial Average down over 150 points to begin the trading session, but pared losses to just under 70 points as of 10:45 a.m. ET.
Both the S&P 500 and Nasdaq Composite were down slightly–six points and 25 points respectively. The markets got a shot in the arm thanks to stronger-than-expected manufacturing data. The ISM U.S. manufacturing PMI rose to 61.3 during the month of August versus 58.1 in July after a Reuters poll of economists were expecting a drop to 57.7.
With a soft deadline last Friday, the U.S. and Canada were unable to procure a revamped NAFTA agreement. Canada is seemingly the next shoe to drop after a deal with Mexico was agreed to last week, but U.S. President Donald Trump appears to be in no hurry with Canada, citing that there’s “no political necessity to keep Canada in the new NAFTA deal.”
Things looked promising when Canada’s Foreign Affairs Minister Chrystia Freeland said talks with the U.S. were “constructive” despite the threat of punitive tariffs on Canadian-made cars if Canada spurns the prospect of a new NAFTA deal come Friday. In the meantime, Freeland was effusive in her praise of Mexico’s trade concessions on autos and labor rights on Tuesday as she rejoined NAFTA talks.
The trade deal struck with Mexico on Monday 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.
Freeland said that Mexico’s tough concessions to the U.S. could pave the way for productive negotiations, but a succinct resolution has yet to be in place.
Emerging markets could weigh on the minds of investors going forward as the MSCI All-Country World Index dropped to 0.4 percent and the MSCI Emerging Market Index fell 0.3 percent–both lows in recent weeks. With currencies being the primary propeller for emerging markets, they haven’t been helped by a strong dollar with the Dollar Spot Index increasing by 0.5 percent to its highest level in almost three weeks.
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