Stocks rise as investors cheer deal between Mexico and US
It was a sea of green in the world of stocks as investors cheered a deal between the United States and Mexico that averted another trade war. The deal allows for Mexico to take more action to reduce the flow of immigrants crossing its southern border. The markets were also boosted by a series of large mergers and acquisitions. Over the weekend, Raytheon agreed to merge with the larger United Technologies in a deal that will create an aviation and defense juggernaut. Earlier today, Salesforce announced that it is acquiring visualization software company, Tableau in a deal worth more than $15 billion. The markets were also boosted by positive data from China, which reported a 1.1% increase in exports and an increase in surplus to more than $41 billion.
The sterling declined today after the UK released weak economic data. The final reading of the country’s GDP came in at 1.3%, which was lower than the previously-announced 1.8%. On a MoM basis, the GDP slid by -0.4%. The manufacturing production decreased by -0.8%, which was lower than the expected increase of 2.2%. Industrial production also decreased by -2.7%, MoM. On an annual basis, industrial production declined by -1.0% in April, which was lower than the expected gain of 1.0%. This happened as Tory politicians made their pitches to succeed Theresa May, who stepped down as Prime Minister on Friday.
Gold declined today after the deal between the United States and Mexico. The metal, which is often viewed as a safe haven declined after the new trade war was averted. US Treasuries, which were also declining rose today in response to the deal. Meanwhile, the price of crude oil moved sideways as traders waited for the OPEC and EIA reports, which are expected later this week. These reports will give more details on oil’s demand and supply.
The GBP/USD pair declined after disappointing GDP numbers from the UK. The pair declined from a high of 1.2762 to a low of 1.2660. On the hourly chart, this was along the 50% Fibonacci Retracement level and along the lower line of the Bollinger Bands. The RSI has moved from the overbought level of 70 to the current 25. There is a likelihood that the pair will continue moving lower, to test the 38.6% Fibonacci Retracement level of 1.2636.
The Japanese yen declined today, even after better-than-expected GDP numbers. In the first quarter, the economy expanded by 2.2%, which was higher than the expected 2.1%. On the 30-minute chart, the price moved above the 25-day and 50-day moving averages. The RSI has moved close to the overbought level while the money flow index has stabilized. There is a possibility that the pair will move up to test the 108 resistance level.
The XAU/USD pair declined sharply today to a low of 1325 as traders reacted to the news on trade. This was much lower from Friday’s close of 1340. On the hourly chart, the pair is slightly below the 50-day and 25-day moving averages. The money flow index declined to the overbought level of 20 while the RSI remained at the oversold level of 30. While the pair could continue moving lower, there is also a possibility that it will resume the upward trend as the trade war with other countries continues.