The US-Japan trade agreement boosts global stock markets, with Japanese stocks rising 3.5% to reach a historic high, European automotive stocks soaring, and the euro declining

According to CCTV News, on the 23rd local time, Japanese Prime Minister Shigeru Ishiba stated at a live press conference that Japan and the United States have reached an agreement on tariffs, the U.S. will impose a 15% tariff on Japan and increase imports of U.S. rice. The agreement also includes Japan's commitment to invest $550 billion in the U.S.

This key agreement alleviated market concerns about a tariff war. The benchmark index of Asian stock markets surged nearly 2% to a four-year high, helping the MSCI global index expand its gains to 11% in 2025. The Japanese stock market hit a record high, with Toyota Motor Corporation's stock price soaring and the yen rising slightly.

• European stocks opened higher, with Germany's DAX index up 1.18%, France's CAC40 index up 1.23%, the Euro Stoxx 50 index up 1.09%, and Italy's FTSE MIB index up 0.9%. European automotive stocks rose, with Mercedes-Benz Group AG up nearly 6%, Porsche up nearly 5%, and Renault up nearly 3%.

• S&P 500 futures rose 0.3%, after the index closed at a record high on Tuesday.

• The Nikkei 225 index closed up 3.5% at 41,171.32 points. Japan's Topix index rose 3.2%.

• The U.S. dollar index rose slightly.

• The euro fell 0.2% against the dollar to 1.1728.

• The yen fell 0.06% against the dollar to 146.72.

• The yield on 10-year U.S. Treasury bonds rose 3 basis points to 4.37%.

• The demand ratio for Japan's 40-year government bond auction hit the lowest level since 2011. The yield on Japan's 10-year government bonds rose to the highest level since 2008.

• Bitcoin fell 0.9% to $118,742.25.

• Spot gold fell 0.4% to $3,418.91 per ounce.

Investors Bet on Tariff Breakthrough, European Automotive Stocks Rise Across the Board

Trump stated on the social platform Truth Social that this "massive" trade agreement "could be the largest agreement ever." Japanese Prime Minister Shigeru Ishiba welcomed this, reportedly stating that it marks "the lowest tariffs among countries with a trade surplus with the U.S."

Phillip Wool, Head of Portfolio Management at Rayliant Global Advisors Ltd., stated:

"This basically aligns with our expectations of Trump. Washington is now genuinely concerned about reaching a headline agreement that allows both sides to claim victory in trade negotiations, but keeps us away from the severe economic consequences that a full-blown trade war could bring."

Charu Chanana, Chief Investment Strategist at Saxo Markets in Singapore, stated:

"The U.S.-Japan agreement sets a tactical precedent for the broader Asian region, especially for economies still negotiating with the Trump administration. By accepting a moderate 15% tariff and committing to symbolic investment inflows, Japan provides a blueprint: making just enough concessions to ease tensions without triggering deep structural reforms The Japanese yen fell 0.06% against the US dollar to 146.72.

Citigroup economist Katsuhiko Aiba stated that the agreement between Washington and Tokyo to reduce auto tariffs to 15% may affect the negotiation process with other major auto-exporting countries, particularly the European Union and South Korea.

After the European stock market opened, the automotive sector performed well. The stock prices of Germany's three automotive giants Volkswagen, BMW, and Mercedes-Benz Group all rose by more than 4%. Luxury car manufacturer Porsche saw the largest increase, soaring by 7.1%.

French auto parts manufacturer Valeo rose by 4%, and Jeep manufacturer Stellantis increased by about 5.4%. Investors are betting that the US-Japan trade agreement may set a precedent for tariff negotiations between other auto-exporting countries and the United States.

Tariff Agreement Provides Blueprint for Asia, Investors Focus on US Earnings Season

According to the Global Times, US Treasury Secretary Janet Yellen announced during an interview with Fox News on the 22nd local time that the third round of China-US trade talks will be held next Monday and Tuesday in Stockholm, Sweden. Previously, the two sides held two meetings in Geneva and London. Reports indicate that August 12 is the deadline for the suspension of additional tariffs, and the latest round of talks aims to postpone this deadline.

Investors are also paying attention to the performance of large technology companies this week. The "Seven Giants" index of US stocks ended a nine-day winning streak on Tuesday.

Tesla and Google will release their earnings reports on the 23rd. Data shows that the seven giant companies are expected to see a combined profit growth of 14% in the second quarter, while the earnings of the remaining components of the US stock market benchmark are expected to remain relatively stable.

Analysts are optimistic about Google's Q2 earnings report, believing that revenue may exceed $90 billion. The search business remains robust, and the AI overview feature is driving an increase in query volume. Despite tight GPU supply, the cloud business still has growth potential, and Citigroup expects Google will not raise its capital expenditure guidance of $75 billion for this year