Asia stocks rise on US-Japan trade deal

July 23, 2025 (MLN): Asia-Pacific markets opened stronger on Wednesday following a major trade development between the United States and Japan.

The surge came after U.S. President Donald Trump confirmed a finalized agreement that sets a 15% tariff on Japanese exports to the U.S., marking a significant shift in trade relations.

The news pushed Japanese equities to a one-year high, with the market buoyed by reduced tariffs on its auto shipments, as CBNC reported.

Optimism spilled over into European stock futures amid renewed hopes for progress in EU-U.S. trade talks.

South Korean automakers also saw gains, as investors bet on improved prospects for a similar tariff arrangement between Seoul and Washington.

The broader region responded positively, with China’s blue-chip index rising 0.46% and Hong Kong’s Hang Seng Index advancing 0.7%. MSCI’s index tracking Asia-Pacific shares outside Japan added 0.8%.

In bond markets, Japanese government bond yields jumped, with 10-year JGBs rising by 8.5 basis points to 1.585%. Meanwhile, the Japanese yen traded slightly weaker at 146.99 per dollar.

Political developments in Japan added to the day’s market momentum.

Reports suggested that Prime Minister Shigeru Ishiba is expected to resign by the end of August amid growing intra-party dissent, following his coalition’s recent upper house election loss.

Saxo’s Chanana noted that Ishiba’s potential exit could pave the way for a leadership more attuned to pro-market strategies and deeper ties with the U.S., while also preserving Japan’s current monetary and fiscal direction.

Elsewhere, the U.S. and China are set to resume trade negotiations in Stockholm next week, with a possible extension of the August 12 deadline on the table, according to Treasury Secretary Scott Bessent.

On Wall Street, the S&P 500 reached another record high overnight, though trading ended mixed. Investors weighed earnings reports that underscored tariff-related pressures.

General Motors shares slid 8.1% after the company disclosed a $1 billion tariff-related cost in its quarterly results.

Market participants now await earnings from Tesla and Alphabet, two of the “Magnificent 7” tech firms that have powered much of the recent rally driven by artificial intelligence enthusiasm.

In currency markets, the dollar remained flat at 97.45 after three consecutive days of losses, while U.S. Treasury yields continued to decline.

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