The S&P 500 and Nasdaq reached all-time highs on Monday after the US and Mexico reached a new trade agreement, which Trump has said was "much more fair" than the current North American Free Trade Agreement.
The S&P 500 gained 0.8%, closing at 2,896.74 with the best performing sectors being materials and financials, while the Nasdaq Composite rose 0.9%, breaking above 8,000 for the first time. Gains were made across many tech giants, including all the FANG stocks, leading the index to close at 8,017.90.
Both of the indices reached record highs while the Dow Jones Industrial Average closed above 26,000 for the first time since February, closing at 26,049.64.
President Donald Trump said the deal would be called The United States-Mexico Trade agreement, renaming the NAFTA name which has been in place for 25 years.
He said the US had been "hurt very badly by NAFTA" and that the new deal, which must be approved by Congress, will be very helpful for farmers and manufacturers.
The update will also include provisions to govern intellectual property, digital trade and investor disputes, among other issues.
Meanwhile, the US and Mexico also agreed that 75% of a product must be made in the two countries to receive tax-free treatment, which is more than in the existing deal.
The final outcome of the deal, however, is still uncertain as Canada, the third country in the pact, will rejoin talks and give its input today.
In his announcement, Trump said: "We will see whether or not we decide to put up Canada or just do a separate deal with Canada," while also threatening the country with tariffs on cars.
According to the BBC, Canadian Prime Minister Justin Trudeau has spoken with Trump since the breakthrough with Mexico was announced.
Trudeau's office said the leaders "had a constructive conversation" and "look forward to having their teams engage this week with a view to a successful conclusion of negotiations."
Investors have been concerned about trade wars over recent months as the US has taken a more protectionist stance toward its economy and trade deals under Trump's administration.
The US has implemented tariffs on billions of dollars worth in Mexican and Chinese imports, to which both countries have retaliated.
Global markets were also boosted by comments from Federal Reserve Chair Jerome Powell who said on Friday that he sees "further, gradual" rate hikes ahead.
18 funds affected
26 years in financial services
Latest news and analysis
High allocation to cash
Backed by Schroders, LGIM and the IA