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Stock markets surge following the signing of the Japan-US trade agreement

Stock exchange Euronext Dublin ends the day with a 1.3% increase, primarily boosted by Kingspan, a Cavan-based insulation company, which soared by 3.6%

Stock markets surge due to finalization of Japan-U.S. trade agreement signing
Stock markets surge due to finalization of Japan-U.S. trade agreement signing

Stock markets surge following the signing of the Japan-US trade agreement

On Wednesday, July 23, 2025, a significant U.S.-Japan trade deal had a positive impact on global stock markets, with major indices reaching record highs. The agreement, which lowered tariffs on Japanese autos to 15% from a previously proposed 25%, and committed Japan to a $550 billion investment into the U.S. economy, fostered optimism about easing trade tensions and the avoidance of damaging tariffs.

Japanese stocks surged as a result, with the Nikkei index rising 3.7%. Major automakers like Toyota and Mazda saw gains of 14% and 18%, respectively. European markets also reacted positively, with the Euro STOXX 600 index climbing 1%. UK shares hit record highs, driven by hopes that a similar US-EU trade deal was imminent.

U.S. stocks also hit record highs, with major indices like the S&P 500 and Dow Jones Industrial Average rising on investor confidence that tariff-related growth risks might lessen. Futures markets also showed gains, anticipating continued positive momentum if a U.S.-Europe trade agreement were reached soon.

The anticipation of a forthcoming U.S.-Europe trade deal further contributed to the bullish sentiment, with President Trump hinting at negotiations starting imminently. However, there remained some uncertainty since EU members were preparing counter-tariff measures should no deal be finalized by August 1, meaning risks were still present.

In other market news, Tesla and Alphabet are set to report after the bell on Wednesday, with high expectations and stretched valuations. Euro zone government bond yields were mixed, with Germany's two-year government bond yield little changed at 1.798%. The gap between German 10-year and 2-year yields rose 1.5 basis points. Meanwhile, AIB and Bank of Ireland finished the day up 1% and 2% respectively, while the FTSE 250 closed up 0.4%. The Cac 40 in Paris advanced 1.5%, and DublinEuronext Dublin finished the day up 1.3%. The Dax 40 in Frankfurt gained 0.8%, and the AIM All-Share closed up 0.5%. However, Texas Instruments tumbled 12.7% after its quarterly profit forecast failed to impress investors, citing weaker-than-expected demand for its analog chips and tariff-related uncertainty. NXP Semiconductors, Analog Devices, and ON Semiconductor also fell due to Texas Instrument's earnings. Toymaker Hasbro slipped 2.4% despite raising its annual revenue forecast.

Kingspan, a Cavan-based insulation specialist, surged 3.6%, and Informa rose 5.3% on the FTSE 100. Car makers such as Toyota climbed 14%, Honda jumped 11%, and Mitsubishi rose 3.6%. GE Vernova's shares climbed 13.7% to an all-time high after beating Wall Street estimates for second-quarter profit and raising its current-year revenue and free cash flow forecasts.

In summary, the U.S.-Japan trade deal on July 23 acted as a catalyst for bullish moves across Japanese, European, and U.S. stock markets by reducing tariff-related risks and raising hopes for a broader easing of trade tensions, including a prospective U.S.-EU agreement. However, uncertainty remains as EU members prepare counter-tariff measures should no deal be finalized by August 1.

The positive impact of the U.S.-Japan trade deal on July 23 extended to various sectors, as technology companies like Tesla and Alphabet saw high expectations and increased valuations. Meanwhile, the surge in Japanese stocks, such as Toyota, Toyota, Honda, and Mitsubishi, showcased a direct influence of the agreement on the automotive sector of Japan's lifestyle. Additionally, the weather forecast for the European stock markets remained sunny, as the Euro STOXX 600 index, UK shares, and several European indices all climbed upwards.

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