TOKYO - U.S. stock futures and Asian shares rose on Monday after the United States dropped its threat to impose tariffs on Mexico in a deal to combat illegal migration from Central America, and as weak U.S. jobs data raised hopes for U.S. interest rate cuts.
Global investors had feared that opening up another trade conflict, while still battling with China, could tip the United States and other economies into recession. Exports, however, unexpectedly rose 1.1% last month, though many suspect the uptick is linked to front-loading of shipments by firms to avoid higher U.S. tariffs.
Although Fed funds rate futures prices dropped on Monday after the Mexico deal, they are still pricing in more than two 25-basis point rate cuts by the end of this year, with one almost fully priced in by July. “Recent comments from current and former central bank governors suggest a consensus is building among Chinese policymakers that they do not attach much significance to defending the seven per dollar level,” said Ei Kaku, currency strategist at Nomura Securities.