Asian markets climbed after President Donald Trump said that he had struck a trade deal with Japan. The deal shrinks tariffs on Japanese auto exports to the U.S. from 25% to 15%, lifting sentiment. Japan's Nikkei index (.N225) jumped 3.2% to also close at a year high. Toyota's shares soared 15%, and Mazda's were up 17% on the news.
The yield on the 10-year Japanese government bond rose 9 basis points, too, as diminished trade uncertainty appeared to open the possibility of interest rate increases by the Bank of Japan.
Early gains for the Japanese yen reversed, with the dollar up 0.2% at 146.9 yen. That came after Prime Minister Shigeru Ishiba was reported to be considering resigning in the wake of his party's defeat in Sunday's upper house election.
EU, South Korea, and China Join the Talks
Hope for a wider trade resolution increased after South Korea said it would send officials to Washington for more trade talks. At the same time, EU representatives from 27 member nations planned to be in the U.S. on Wednesday to renegotiate. Optimism around a possible EU-U.S. deal sent European stock futures up 1.1%.
American and Chinese officials will also meet in Stockholm next week to discuss extending the current deadline on tariffs. These are developments that market participants are monitoring very closely as they influence the global mood.
Earnings tin Focus: Tesla, Alphabet, and the Tariff Effect
Markets now turn their attention to second-quarter earnings reports. Alphabet and Tesla, two members of the "Magnificent 7" of tech stocks, will also report results today after the market close. Analysts are eager to hear how the companies are coping with higher tariffs and shifting global demand.
Early signs are mixed. General Motors dropped 8.1% after reporting a $1 billion tariff-related loss in its most recent quarter. Investors have become more attuned to earnings for evidence of a wider economic slowdown or deeper fallout from Trump's trade policies.
What's Next?
Market direction is still uncertain, with more tariffs ahead and fresh corporate earnings on the schedule. Here's what you need to know at the end of the day. U.S.- EU TRADE TALKS E.U. Trade Commissioner Resigns Amid Inquiries Sabine Weyand, the bloc's deputy Brexit negotiator, said on Wednesday that the 30-member European Union was ready to discuss trade terms with the United States as well.
