Top 5 Things to Know in the Market on Monday

A trader works on the floor of the New York Stock Exchange shortly after the opening bell in New York, U.S., January 5, 2018. REUTERS/Lucas Jackson – Here are the top five things you need to know in financial markets on Monday, June 10:

1. Trump suspends tariffs on Mexico

U.S. President Donald Trump announced a deal with Mexico putting a hold on 5% tariffs on Mexican goods that had been set to go into effect on Monday.

Trump, who threatened increasing tariffs on Mexico if the country didn’t work harder to stop immigrants crossing into the U.S., said he now has “full confidence” that Mexico will be more cooperative.

The Mexican peso rallied 2% against the dollar on the news, though few details of the agreement were released, including whether Mexico has promised to purchase more U.S. agricultural products or beef up policing of its southern border with Guatemala.

Trump indicated implementing tariffs remains an option if cooperation does not proceed as planned, but emphasized that he doesn’t think they’ll be necessary.

2. Global stocks celebrate U.S.-Mexico deal

Global equities registered solid gains on Monday as markets applauded Trump’s decision to suspend tariffs on Mexican goods.

Though the U.S. remains locked in a trade dispute with China, the deal with Mexico provided a sigh of relief for markets concerned that Trump’s aggressive trade tactics could result in a global recession.

Asian and European shares were up around 1%, though Australian, German and Swiss stock markets were closed for a holiday.

U.S. futures pointed to smaller gains at the open, coming off what was their best weekly climb since November. Wall Street ended Friday 1% higher as a weaker-than-expected jobs report spurred hopes the Fed will cut rates this year. Dow futures gained 82 points, or 0.3% by 5:26 AM ET (9:26 GMT), S&P 500 futures rose 9 points, or 0.3%, while Nasdaq 100 futures traded up 26 points, or 0.4%.

3. U.S.-China trade deal in limbo until end of June

U.S. Treasury Secretary Steven Mnuchin told CNBC in an interview that Trump would decide whether further tariffs on China are appropriate after meeting with Chinese President Xi Jinping at the G20 summit scheduled for the end of the month. Mnuchin stated that the president was “perfectly happy” to hit Beijing with new tariffs if the meeting doesn’t go well.

G20 finance leaders who met over the weekend warned that intensifying trade and geopolitical tensions were the biggest risk to the stabilization of global growth.

Data released overnight showed that China’s exports unexpectedly returned to growth, although some analysts suspect that manufacturers may have increased shipments to avoid the most recent round of U.S. tariffs on $300 billion of Chinese goods. Chinese imports, however, registered their largest decline in nearly three years, providing another sign of weak domestic demand.

4. United Technologies and Raytheon to merge

United Technologies (NYSE:UTX) and Raytheon (NYSE:RTN) agreed to a merger that would create an aerospace and defense giant worth around $121 billion, the sector’s largest deal ever.

The companies are likely to argue that their business overlap is limited in order to avoid critiques from antitrust regulators although Boeing (NYSE:BA), Airbus and the Pentagon are expected to raise objections.

The deal is expected to close in the first half of 2020 once United Technologies completes the spinoff of its Carrier air-conditioner and Otis elevator businesses.

Read more: 3 Stocks To Watch This Week: Broadcom (NASDAQ:AVGO), Lululemon, United Technologies – Haris Anwar

5. Oil prices rise on Saudi-Russian deal pledge

Oil prices climbed further on Monday as a pledge from Saudi Arabia and Russian to extend coordination action to balance markets, a drop in U.S. drilling activity and the deal between the U.S. and Mexico outweighed concerns over the global economy.

Saudi Energy Minister Khalid al-Falih said it was close to an agreement to extend the production cut agreement between OPEC and non-member allies led by Russia, while Russian counterpart Alexander Novak said they’d agreed to take coordinated action.

Baker Hughes data released late Friday also showed that the number of U.S. working rigs, considered an indicator of future output, fell to the least since February 2018 in the previous week.

U.S. crude oil futures gained 30 cents, or 0.6%, to $54.29 by 5:27 AM ET (9:27 GMT), while Brent oil traded up 29 cents, or 0.5%, to $63.58.