By Avantika Chilkoti 

U.S. stocks were set to open higher Monday as investors cheered an immigration deal between the U.S. and Mexico, struck late Friday, which lifted the threat of new tariffs.

Futures pointed to opening gains on Wall Street of 0.5% for both the Dow Jones Industrial Average and the S&P 500.

In Europe, the Stoxx Europe 600 was up 0.2% in morning trading, while German markets were closed for a public holiday. In Asia, the Shanghai Stock Exchange was up 0.9%, Hong Kong's Hang Seng gained 2.3% and Japan's Nikkei index was up 1.2%.

Mexico said Friday it would expand border programs to stem migration into the U.S. Meanwhile, trade tensions between the U.S. and China drag on. China said on Monday imports dropped sharply last month, adding to pressure on Beijing as it struggles to manage trade relations with Washington.

The WSJ Dollar Index, which tracks the dollar against a basket of 16 currencies, was up 0.3%. The Mexican peso rose 1.8% on the dollar, and the Chinese yuan was down 0.3% on the dollar.

The non-energy minerals, consumer durables and producer manufacturing sectors led European stocks higher on Monday. Among the biggest gainers were steel giant ArcelorMittal and Ocado Group, the online retailer. Shares of car makers, which analysts say are particularly vulnerable to shifts in global trade, also received a boost.

Shares in United Technologies rallied 2.9% and Raytheon was up 8.1% in premarket trading after the companies agreed to merge, creating the second largest aerospace-and-defense company in the world by sales behind Boeing.

The 10-year U.S. Treasury yield rose to 2.140% on Monday from 2.085% on Friday. And the yield on the equivalent German bonds remained in negative territory at minus 0.217%. Yields and prices move in opposite directions.

Investors have rushed into government debt in recent weeks, sending yields lower as worries about the future of global growth weighed on market sentiment.

"There is a lot of noise in the market and rates are reflecting that. Stock markets have dropped, there are the China trade issues and significant political posturing between China and the U.S., and the U.S. and Mexico and Canada," said Nick Maroutsos, co-head of global bonds at Janus Henderson Investors. "Ultimately, we think a deal will get done and a soft landing is going to be more likely than a crash landing. Ultimately, the Fed is there to back stuff."

Also buoying equity markets this week were fresh expectations of an interest-rate cut from the Federal Reserve following comments from central bank officials last week.

Investors will be watching for signs that the U.S. economy is weakening this week when May inflation figures are published on Wednesday and retail sales data on Friday.

"This is getting dangerously circular: Chasing markets is a losing proposition for a central bank -- and for stock markets to like weak economic numbers in anticipation of a rate cut is an equally losing proposition," Erik Nielsen, chief economist at UniCredit Bank wrote in a recent note.

In commodities, global benchmark Brent crude oil was flat at $63.30 a barrel.

Write to Avantika Chilkoti at Avantika.Chilkoti@wsj.com

(END) Dow Jones Newswires

June 10, 2019 08:46 ET (12:46 GMT)

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