International stock markets saw a strong boost this Wednesday following the announcement of a trade agreement between the United States and Japan that will reduce tariffs imposed during Donald Trump’s administration, particularly in the strategic automotive sector.
Investor optimism also grew with the news that Washington had reached similar agreements with Indonesia and the Philippines, fueling expectations that more countries might join before August 1—the deadline set by Trump for the implementation of new punitive tariffs.
“The news of the deal with Japan is raising hopes that more trade agreements could be finalized before the tariffs take effect,” explained Russ Mould, Investment Director at AJ Bell.
In Europe, London’s FTSE 100 index rose 0.5% after hitting a new record high at the open. Paris advanced 1%, and Frankfurt also posted gains, in line with strong performance across Asian markets.
In the United States, stock futures were trending upward: the Dow Jones rose nearly 0.5%, the S&P 500 gained 0.4%, and the tech-heavy Nasdaq 100 climbed 0.2%.
In Asia, Tokyo led the gains with a jump of over 3%, driven by President Trump’s announcement of a reduction in tariffs on Japanese goods from 25% to 15%. The measure will especially benefit the auto sector, which accounts for 8% of employment in Japan. In return, Japan agreed to invest $550 billion in the United States, according to Trump’s social media posts.
The deal sparked a rally in Japanese automakers: Toyota surged over 14%, Mitsubishi rose 13%, and Nissan jumped 8%. The enthusiasm spilled over to European manufacturers as well: in Frankfurt, Porsche gained over 7%, while Volkswagen and BMW rose around 6%. In Paris, Stellantis led the CAC 40 with a nearly 7% advance.
“The agreement reinforces the view that other countries could also secure favorable terms if they show willingness to invest in the U.S.,” commented Kathleen Brooks, Director of Research at XTB Group.
Trump also announced a tariff cut on Filipino products, from 20% to 19%, and a similar reduction for Indonesia, from 32% to 19%. These moves have renewed hopes for additional deals before Friday, although negotiations with the European Union and South Korea remain complex.
The EU’s chief trade negotiator is scheduled to meet with U.S. Commerce Secretary Howard Lutnick later today, while Treasury Secretary Scott Bessent will travel to Stockholm next week for talks with Chinese officials. Another key date looms in mid-August, when higher tariffs on Chinese goods could be reinstated.
In Japan, 10-year sovereign bond yields hit their highest level since 2008, driven by rumors of Prime Minister Shigeru Ishiba’s possible resignation after an electoral defeat. Ishiba has denied the reports.
Elsewhere in Asia, Hong Kong reached its highest level since late 2021, while Shanghai remained stable.
Optimism was also evident on Wall Street. The S&P 500 closed at a new record high, although the Nasdaq ended a six-session winning streak. Investors are now eagerly awaiting earnings reports from tech giants like Alphabet (Google’s parent company), Tesla, and Intel.