In London, the FTSE 100 closed up 0.5% to 7,617.22 points; Frankfurt — DAX 30 ended down 0.09% to 12,527.42 points and Paris — CAC 40 closed up 0.1% to 5,484.99 points yesterday.
Equities had already been enjoying a run-up after Federal Reserve boss Jerome Powell last week indicated that the US central bank would not aggressively raise interest rates.
“US stocks are adding to a recent run in early action that has the markets back in record high territory, with the global markets finding support from yesterday’s bilateral trade agreement between the US and Mexico, which appeared to alleviate some of the festering uneasiness,” said analysts at Charles Schwab brokerage.
In opening trade, the S&P broke through the 2,900-points level for the first time ever, while the Nasdaq Composite also blew by the intraday record it set the day before.
The US-Mexico agreement raises hopes that the wider North American Free Trade Agreement which also includes Canada and was rejected by the White House soon after US President Donald Trump’s election, can be salvaged after Canada rejoins talks.
Analyst Patrick O’Hare at Briefing.com said that it is still unclear whether a three-way deal with Canada can be reached by the end of the week as needed, or whether the US Congress would approve a bilateral deal with Mexico.
“For now, market participants seem to be content knowing something got done at least with Mexico,” he said in a note to clients.
Mizuho Securities said in a note to clients that investors are monitoring “the US-Canada negotiations...
and the impact on US-China trade talks”.
Monday’s agreement comes after officials from Washington and Beijing last week held talks aimed at easing trade tensions that have seen them hit each other with tariffs on tens of billions of dollars worth of goods.
While the meeting did not achieve any breakthrough, the fact it took place at all was seen as a good sign.
Stephen Innes, head of Asia-Pacific trading at OANDA, said dealers were “in a festive mood” as the Mexico deal removed “one major hurdle that has been haunting North American investors for months”.
However, Trump appeared to temper expectations for a fresh round of talks with China, saying after announcing the new pact that “it’s just not the right time to talk right now” before adding: “eventually, I’m sure that we’ll be able to work out a deal”.
In foreign exchange trading, Turkey’s lira weakened to around 6.25 against the dollar, with dealers continuing to fret over the country’s financial crisis.
The pound slid after Prime Minister Theresa May indicated that a no-deal Brexit would not be a disaster for Britain, playing down warnings of serious consequences for the UK economy.