Global Stocks Rally as U.S.-Japan Auto Trade Deal Sparks Market Optimism
Global stock markets surged following a breakthrough trade agreement between the United States and Japan, which saw reduced tariffs on Japanese automobile exports. The Euro STOXX 600 rose by 1%, with auto sector shares leading the gains at 3.6%, while Japan’s Nikkei jumped 3.7%, hitting a one-year high. The deal reduced U.S. tariffs on Japanese car imports from a proposed 25% to 15%, sparking widespread optimism across global markets.
The announcement ignited speculation that similar deals might soon follow, especially as U.S. President Donald Trump confirmed that European Union officials were heading to Washington for trade talks. UK markets also responded positively, with the FTSE climbing 0.5% to a record high. Analysts at Deutsche Bank noted that the deal eased fears of a broader tariff hike expected on August 1, lifting investor confidence across Europe and Asia.
The Japanese auto industry saw some of the biggest gains, with Mazda soaring 18% and Toyota jumping 14%. South Korean automakers also rose, driven by expectations of improved trade terms with the U.S. Meanwhile, the Japanese yen held steady at 146.71 per dollar after a previous decline, and the dollar index remained largely flat, reflecting subdued currency market reactions despite the equity rally.
Adding to the market positivity, U.S. and Chinese officials are set to meet in Stockholm to discuss extending the August 12 deadline for their trade negotiations. Meanwhile, Japan’s Prime Minister Shigeru Ishiba dismissed rumors of his resignation after his party’s upper house election setback, stabilizing political concerns at home. The trade deal is expected to reduce pressure on Japan’s economy and potentially give the Bank of Japan room to raise interest rates.
Despite the global boost, U.S. markets were mixed, with the S&P 500 inching up to a record high and the Nasdaq slipping slightly. Corporate earnings reflect the toll of ongoing trade disputes, as General Motors reported a $1 billion tariff-related hit, sending its shares down 8.1%. Investors now await earnings from Tesla and Alphabet, key drivers of recent market momentum. Meanwhile, oil prices edged higher, supported by low diesel inventories in the U.S. and modest gains in both Brent and crude benchmarks.
Source: Reuters