Tokyo Stocks Soar on U.S.-Japan Trade Deal, Automakers Lead Gains

Tokyo's stock market experienced a significant surge on Wednesday morning, with gains exceeding 3 percent. This positive movement followed President Donald Trump's announcement of a substantial trade agreement with Japan. The agreement included a reduction in reciprocal tariffs, decreasing them to 15 percent from the previous 25 percent.

The Nikkei Stock Average, comprising 225 issues, saw a substantial increase of 1,278.52 points, equivalent to a 3.21 percent rise, reaching 41,053.44. This also marked a one-year high for the index during intraday trading. The broader Topix index also performed well, gaining 88.23 points, or 3.11 percent, to reach 2,924.42.

The positive sentiment extended across all industry sectors on the Prime Market, with transportation equipment, banking, and pharmaceutical companies leading the gains. The trade deal between the U.S. and Japan also eased concerns about the Japanese economy's outlook, which led to a strengthening of the yen.

The U.S. dollar briefly weakened in Tokyo, trading in the lower 146 yen range. At noon, the dollar was valued at 146.93-94 yen, compared to 146.62-72 yen in New York. The euro was also quoted at $1.1734-1736 and 172.41-45 yen.

Automobile shares experienced a significant surge, driven by reports that the U.S. tariff on Japanese cars would be reduced to 15 percent from 27.5 percent. Toyota Motor saw a substantial increase of 13.7 percent, while Mazda Motor surged by 17.7 percent.

Market analysts noted that the positive market reaction was due to the relatively quick announcement of the trade deal following the national election. However, concerns were raised about the potential impact of political changes in Japan on the market, particularly regarding the possibility of Prime Minister Shigeru Ishiba's resignation.