Monday Markets Show a Tesla USMCA Jolt
USA — October 2, 2018
The Dow Jones gained 193 points on Monday on the announcement Sunday of the last minute deal on trade between the United States, Canada, and Mexico.
The new trade agreement reached after Canada agreed to let US dairy farmers have better access to Canadian markets, and concessions by the US on auto tariffs affected the Dow and other markets.
The S&P 500 gained 0.4%, and the Nasdaq lost 0.1% as shares in major automaker climbed on the news some automobile tariffs for cars and trucks built in Canada and Mexico will be eased. The new agreement, which replaces NAFTA and will be called the United States-Mexico-Canada Agreement (USMCA).
Shares in GM gained 1.6%, and Ford climbed 0.8%, while Fiat Chrysler rose 2.7%.
However, market experts claim investors might be overenthusiastic about the USMCA agreement, that some say will cause still more trade battles. That's because the United States still faces another major trade battles. David Kelly, a chief global strategist with JPMorgan Funds, had this to say in a report yesterday:
"While the U.S. has reached a new trade agreement with Mexico and Canada, growing trade conflict between China and the U.S. threatens economic growth in both countries .”
Key experts also point to the fact that the US-China trade situation may not be resolved so positively. the A case in point is the fact that China has leverage over the US, in the form of US Treasury debt, that Canada doesn't have. News this morning of a US Navy ship in the South China Sea being confronted by Chinese destroyer illustrates the level of tension in between the two nations.
In other market news, shares of Tesla climbed 17% on the news that the SEC and Tesla boss Elon Musk had come to an agreement on the accusation Musk had allegedly made "false and misleading statements" earlier this summer when he tweeted that he had "funding secured" for a deal to take Tesla private. Musk admitted to no wrongdoing, but the company is paying a $20 million fine.
Finally, Shares of GE jumped 7% on the announcement that company CEO John Flannery is being replaced by Larry Culp, a former head of industrial conglomerate Danaher.