Asian stock markets surged at Wednesday’s open, with Japanese equities leading a broad regional rally after US President Donald Trump announced that he had completed a “massive Deal” with Japan.
The agreement, which reportedly sets a new 15% tariff on the country’s exports to the US, has sent a wave of relief through markets, particularly boosting Japanese automakers. Indian benchmarks, like the Sensex, are also poised for a higher open.
The primary catalyst for the market’s bullish mood was President Trump’s announcement late Tuesday US time.
In a post on his Truth Social platform, he declared that he had made the “largest Deal ever” with Japan, which involves tariffs of 15% on the country’s exports to the US Trump also said that as part of the deal, Japan will invest $550 billion into the United States, adding that the US will “receive 90% of the Profits.”
He further stated that Japan will “open their Country to Trade, including Cars and Trucks, Rice and certain other Agricultural Products, and other things,“ a move that he claimed would create “Hundreds of Thousands of Jobs.”
The market’s reaction in Tokyo was immediate and powerful. Japan’s benchmark Nikkei 225 and the broader Topix index both surged by over 3%. In early trade, the Nikkei 225 was up 1.71% at the open, while the Topix climbed 1.87% as of 9:09 a.m. Japan time.
Japanese government bond yields also rose, with the 10-year yield adding eight basis points to 1.593%, while the 30-year bond yield was up over 3 basis points to 3.12%. The Japanese yen was last trading at 147.15 against the dollar.
Auto stocks lead the rally on lower tariff news
Shares of Japanese automakers soared on the news. The rally was further fueled by a report from Tokyo’s public broadcaster NHK, which, citing a Japanese official, stated that the US had reportedly lowered its tariffs on autos from the country to 15% from a previously threatened 25%.
In response, shares of Japan’s Honda jumped 8.42%, while Toyota climbed an impressive 9.97%. Nissan jumped over 7%, Mazda Motor surged over 16%, and Mitsubishi Motors popped over 12%.
The positive sentiment also spilled over to South Korean carmakers, with Hyundai rising over 5% and Kia up 7.06%, though it is unclear if the reduced auto tariff rate will be extended to other Asian automakers.
Broad gains across the region, Indian markets to follow
The optimism was not confined to Japan. South Korea’s Kospi added 0.89%, and the small-cap Kosdaq was 0.22% higher. Australia’s S&P/ASX 200 rose 0.34%.
Mainland China and Hong Kong stocks also opened higher, with the region largely in the green. Mainland China’s CSI 300 was up 0.3%, while Hong Kong’s Hang Seng Index gained 0.63%. The broader MSCI index for Asia-Pacific stocks outside Japan also gained 0.7%, suggesting wider optimism in global markets.
This followed a strong session on Wall Street overnight, where the US benchmark S&P 500 rose to another record high.
Indian benchmark indices, the Sensex and Nifty, are also expected to open higher on Wednesday, taking their cues from the strong gains in other Asian markets following the US-Japan trade agreement.
The development has raised hopes of further trade pacts, which is helping to boost investor confidence. At 8:08 am, Gift Nifty futures were trading at 25,181.50, indicating that the Nifty 50 may open above Tuesday’s close of 25,060.90, pointing to a positive start for the domestic bourses.
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