Global Stock Markets Surge After US-Japan Tariff Deal: What It Means for Traders

Global Stock Markets Surge After US-Japan Tariff Deal: What It Means for Traders

After a breakthrough trade agreement between the US and Japan, global stock markets posted strong gains — especially in the automotive sector.
Here's what traders need to know and where the momentum might head next.

Trade Talks Spark Optimism Across Global Markets

Global markets surged midweek following a trade agreement between the US and Japan that reduced auto tariffs and renewed hopes for broader deals. The news sent Japanese stocks to yearly highs, while European shares jumped on speculation of a similar deal with the European Union.

President Donald Trump announced that under the new agreement, Japan would face a 15% tariff on exports to the US, significantly lower than the previously threatened 25%.
This follows a 19% tariff deal with the Philippines, and with EU officials arriving in Washington, optimism is building for a potential EU-US accord as well.

Global Stock Markets Surge After US-Japan Tariff Deal: What It Means for Traders

Amid rising geopolitical tension over trade, this shift signals a possible easing of protectionist policies — at least temporarily.

Key Market Reactions: Autos Lead the Rally

European indices reacted swiftly:

Euro STOXX 600 rose 1%, with
Automotive stocks (.SXAP) jumping 3.6%, and
UK's FTSE climbing 0.5% to a record high.
On Wall Street, S&P 500 futures ticked up 0.2%, and Nasdaq futures gained 0.1%.

Meanwhile, Japanese automakers saw explosive gains:

Mazda Motor surged 18%,
Toyota rallied 14%, and
The Nikkei 225 advanced 3.7%.

South Korean automakers also joined the rally, amid speculation they may be next in line for tariff negotiations.

“This deal gives hope that the US may strike more agreements and avoid August 1st tariff hikes,” said analysts at Deutsche Bank.

Forex and Bonds: Mixed Signals from Currency and Debt Markets


The US dollar remained under pressure, with the greenback trading at 146.71 yen, flat after a 0.5% drop the previous session.
The US Dollar Index was steady at 97.48.

In the bond market, optimism about Japan’s economy pushed the 10-year Japanese government bond yield up 8.5 basis points, closing at 1.585%.
Analysts interpret the trade deal as reducing economic risks, giving the Bank of Japan more room to tackle inflation via interest rate adjustments.

Corporate Earnings Reveal Trade War Costs

Despite the market rally, some corporate earnings highlighted the lingering pain of tariff wars.
General Motors fell 8.1% after revealing $1 billion in quarterly losses due to US tariffs — a stark reminder that damage has already been done.

What’s Next? US-China Talks and August 1 Deadline

Looking ahead, all eyes are on upcoming talks between US and Chinese officials in Stockholm, scheduled for next week.
The goal: potentially extend the August 12 deadline for a broader trade deal.

The CSI 300 Index (China's blue chips) initially rose 0.7% before trimming gains. The MSCI Asia-Pacific Index (excluding Japan) gained 1.2%, reflecting broader regional optimism.

A Short-Term Boost or Long-Term Shift?

While markets have responded positively to this week’s developments, the underlying trade tensions haven’t disappeared. Tariff reprieves are welcomed, but the true test lies in follow-through negotiations with other global partners.

For traders and investors, this is both an opportunity and a warning. Momentum is strong — but so is uncertainty.


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By Miles Harrington 
July 23, 2025


 

FX24

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