U.S. President Donald Trump’s threats to cancel the North American Free Trade Agreement (NAFTA) sent Wall Street lower on Wednesday, but Canada and Mexico, the U.S.’s trade partners, didn’t seem to take the comments as seriously as market analysts. At a rally in Phoenix on Tuesday night Trump mentioned that “we’ll end up probably terminating NAFTA at some point,” because there seemed to be a wide rift between the participating countries regarding critical issues and a meeting over the weekend between the U.S., Mexico and Canada failed to bring forth a resolution. Another meeting will take place in Mexico on September 1.
Trump has long made public his belief that NAFTA is harmful for American workers and that he would not hesitate to pull the plug on the deal if significant changes were not implemented. The Nasdaq, S&P 500 and Dow Jones Industrial Average all closed down on Wednesday. Asian shares headed higher on Thursday morning, ignoring Wall Street’s losses entirely. The Shanghai composite was up 0.22 percent, South Korea’s Kospi was up 0.57 percent and Australia’s ASX 200 was up 0.12 percent.
Mexican Foreign Minister Luis Videgaray said that Mexico would not be scared by Trump’s comments, while his colleague, Economy Minister Ildefonso Guajardo added that Mexico has a backup plan if NAFTA disintegrates.
Dollar Seeks Direction
The dollar was trading relatively flat during early trade in Thursday’s Asian session. The euro was down against the greenback a scant 0.01 percent to $1.1804 while the dollar held firm against the yen, gaining 0.11 percent to trade at 109.14 at 9:55 a.m. HK/SIN after easing slightly overnight. The dollar index was up 0.04 percent to 93.24 .DXY.