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U.S. Stocks May Open Higher On Resolution Of Tariff Standoff

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Following the substantial rebound seen last week, stocks are likely to see some further upside in early trading on Monday. The major index futures are currently pointing to a higher open for the markets, with the Dow futures up by 134 points.

Early buying interest is likely to be generated in reaction to news the U.S. and Mexico have reached an agreement to avert President Donald Trump's threatened tariffs on all Mexican imports.

Trump revealed in a post on Twitter late Friday that the 5 percent tariff he threatened to impose on Mexican imports beginning today has been "indefinitely suspended."

The suspension of the tariff threat comes as the two countries signed a deal Trump claims will help stop the flow of migrants through Mexico and into the U.S.

"I am pleased to inform you that The United States of America has reached a signed agreement with Mexico. The Tariffs scheduled to be implemented by the U.S. on Monday, against Mexico, are hereby indefinitely suspended," Trump tweeted.

He added, "Mexico, in turn, has agreed to take strong measures to stem the tide of Migration through Mexico, and to our Southern Border. This is being done to greatly reduce, or eliminate, Illegal Immigration coming from Mexico and into the United States."

Details of the deal announced by the State Department indicated Mexico will take unprecedented steps to increase enforcement to curb irregular migration, including deploying 6,000 troops from its newly formed National Guard to its southern border.

However, some analysts have questioned the impact of the steps being taken by Mexico, arguing Trump threatened to derail a key economic partnership for a deal that ultimately maintains the status quo.

Trump also warned on Twitter this morning that the tariffs will be reinstated if Mexico's legislative body does not approve an unrevealed but "very important" part of the deal.

News of the M&A front may also generate early buying interest, with Raytheon (RTN) and United Technologies (UTX) seeing notable pre-market strength after announcing an all-stock merger of equals to create a $120 billion defense and aerospace giant.

Extending the substantial recovery seen over the past few sessions, stocks moved sharply higher during the trading day on Friday. With the rally, the Dow reached its best closing level in a month after ending last Friday's trading at a four-month closing low.

The major averages finished the day off their highs of the session but still firmly in positive territory. The Dow jumped 263.28 points or 1 percent to 25,983.94, the Nasdaq soared 126.55 points or 1.7 percent to 7,742.10 and the S&P 500 surged up 29.85 points or 1.1 percent to 2,873.34.

For the week, the Dow skyrocketed by 4.7 percent to record its best week since November, while the Nasdaq and the S&P 500 spiked by 3.9 percent and 4.4 percent, respectively.

In overseas trading, stock markets across the Asia-Pacific region moved notably higher during trading on Monday. Japan's Nikkei 225 Index surged up by 1.2 percent, while Hong Kong's Hang Seng Index soared by 2.3 percent.

The major European markets have also moved to the upside on the day, although the German markets are closed for a holiday. While the U.K.'s FTSE 100 Index has advanced by 0.6 percent, the French CAC 40 Index has risen by 0.3 percent.

In commodities trading, crude oil futures are edging up $0.20 to $54.19 a barrel after jumping $1.40 to $53.99 a barrel last Friday. Meanwhile, after rising $3.40 to $1,346.10 an ounce in the previous session, gold futures are plunging $14.70 to $1,331.40 an ounce.

On the currency front, the U.S. dollar is trading at 108.57 yen compared to the 108.19 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is valued at $1.1307 compared to last Friday's $1.1334.

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