Global stock markets rallied on Wednesday following the announcement of a trade deal between the United States and Japan that will ease tariffs imposed during Donald Trump’s administration, particularly in the key automotive sector.
Investor sentiment was further buoyed by news that Washington had also reached similar agreements with Indonesia and the Philippines, raising hopes that more countries will follow suit ahead of the August 1 deadline set by Trump for the implementation of new punitive tariffs.
“The news of a trade agreement with Japan is fueling optimism among investors that more deals could be secured before tariffs take effect,” said Russ Mould, investment director at AJ Bell.
In Europe, London’s FTSE 100 rose 0.5% after hitting another all-time high at the open. Paris gained 1%, while Frankfurt also moved higher, mirroring positive momentum from Asian markets.
In the U.S., stock futures were up across the board: the Dow Jones Industrial Average rose about 0.5%, the S&P 500 climbed 0.4%, and the tech-heavy Nasdaq 100 advanced 0.2%.
In Asia, Tokyo led the gains with a jump of more than 3%, driven by President Trump’s announcement to cut tariffs on certain Japanese goods from 25% to 15%. The move is expected to benefit the auto industry in particular, which accounts for 8% of Japan’s workforce. In exchange, Japan pledged to invest $550 billion in the U.S., according to a statement posted by Trump on social media.
The agreement sent Japanese carmakers’ stocks soaring: Toyota rose over 14%, Mitsubishi 13%, and Nissan 8%. The momentum spread to European automakers as well—Porsche gained more than 7% in Frankfurt, while Volkswagen and BMW rose around 6%. In Paris, Stellantis led the CAC 40 with a gain of nearly 7%.
“The deal reinforces the idea that other countries might also secure favorable terms if they’re willing to invest in the U.S.,” said Kathleen Brooks, head of research at trading group XTB.
Trump also touted an agreement with Manila to reduce tariffs on Filipino goods by one percentage point to 19%, while duties on Indonesian products were cut from 32% to 19%. These announcements fueled further hopes that additional deals could be reached before Friday’s deadline, although negotiations with the European Union and South Korea remain challenging.
The EU’s chief trade negotiator is scheduled to meet with U.S. Commerce Secretary Howard Lutnick later on Wednesday, while Treasury Secretary Scott Bessent will head to Stockholm next week for talks with Chinese officials. Another critical deadline looms in mid-August, when tariffs on Chinese goods could return to higher levels.
In Japan, the yield on 10-year government bonds surged to its highest level since 2008, amid media speculation that Prime Minister Shigeru Ishiba might resign following a weekend electoral setback—rumors he later denied.
Elsewhere in Asia, Hong Kong reached its highest level since late 2021, while Shanghai remained steady.
Markets were also buoyed by a largely positive session on Wall Street, where the S&P 500 hit another record high, although the Nasdaq ended a six-day winning streak. Investors are now looking ahead to earnings reports from tech giants including Alphabet (Google’s parent company), Tesla, and Intel.
