A newly announced trade deal between the United States and Japan has spurred positive movement in both crude oil prices and Tokyo’s Nikkei 225 index. According to reports, the deal, touted by former President Donald Trump, involves a substantial $US550 billion investment from Japan into the US, coupled with a reciprocal 15 per cent tariff. News of the agreement has been met with enthusiasm in early trading sessions.
On Wednesday, the Nikkei 225 index opened significantly higher, registering a 1.8 per cent increase. Simultaneously, Brent crude oil experienced a boost, climbing 0.5 per cent to reach $US68.95 per barrel. Among the top performers were automotive manufacturers Mazda and Toyota, both witnessing gains exceeding 10 per cent.
IG market analyst Tony Sycamore noted that while specific details of the Japan trade deal remain limited and potential disagreements from the Japanese side may surface, the deal as announced appears beneficial for overall markets. Sycamore highlighted that the agreement is considerably below the previously threatened 25 per cent tariff level, easing concerns of a more aggressive trade environment. He added that this agreement marks the sixth US trade deal recently, following similar arrangements with Britain, Vietnam, the Philippines, Indonesia, and China.
Looking ahead, US Treasury Secretary Scott Bessent is scheduled to meet with his Chinese counterpart next week to discuss the possibility of extending the August 12 deadline for tariffs on Chinese imports. Sycamore suggests that reaching an accord with the EU would further mitigate the impact of the August 1 deadline, potentially rendering it a non-event for financial markets. IG is a global financial service provider that offers online trading in shares and other assets.
