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July 23, 2025 – 04:40

(Bloomberg) — The record-breaking run in global stocks got fresh fuel to power the rally after the US reached a trade deal with Japan, an agreement with a key trading partner that eases concerns about the tariff war.

Asian shares rose the most in a month, helping the MSCI gauge for global stocks extend its gains this year to 11%. Futures for the S&P 500 edged up 0.2% on the tariff news after the index closed at its highest level Tuesday. Contracts for European stocks advanced 1%. The Nikkei-225 index in Japan jumped 3.2%, with Toyota Motor Corp. and other carmakers leading the gains. 

The yen weakened against the dollar and Japanese shares extended their gains on a report Prime Minister Shigeru Ishiba will announce his resignation by the end of August.

Stocks have run up since their April slump on expectations countries will strike agreements with the US ahead of an Aug. 1 deadline, avoiding significant damage to company earnings and the global economy. So far, macroeconomic data have shown little sign that tariffs are acting as a catalyst to push the US economy into a recession.

“This is pretty much what we’ve come to expect of Trump,” said Phillip Wool, head of portfolio management at Rayliant Global Advisors Ltd. “What really matters to Washington now is getting headline deals that allow both sides to claim they’ve scored a win in trade talks, but get us away from the potentially severe economic consequences of an all-out trade war.”

A gauge of the dollar rose 0.1% while yields on the 10-year Treasury rose two basis points to 4.36%. Oil edged higher.

Trump said he reached a trade deal with Japan that will set tariffs on Japanese imports at 15% and see the key American ally invest $550 billion into the US.

Additional details of the preliminary agreement with Japan — including, critically, if Japanese automobiles and parts would receive a carve-out from separate 25% tariffs — were not immediately available. Japan’s public broadcaster NHK said Washington would also set the rate on the auto sector at 15%, citing an unidentified government official.

“The U.S.–Japan deal sets a tactical precedent for broader Asia, especially for economies still negotiating with the Trump administration,” said Charu Chanana, chief investment strategist at Saxo Markets in Singapore. “By accepting a diluted 15% tariff and pledging symbolic investment flows, Japan has offered a blueprint: concede just enough to defuse escalation without triggering deep structural reform.”

The US also reached an agreement with the Philippines setting a 19% tariff on the country’s exports. Trump initially imposed a 17% rate for the US ally in April, which was paused to allow time for negotiations. He then threatened earlier this month to raise the charge to 20%.

Shares in Manila rose 0.2% as trading started Wednesday.

Investors are also focused on megacap companies this week. Big tech’s strength will be on full display over the next few weeks as the group begins unveiling quarterly earnings. A gauge of the so-called “Magnificent Seven” giants halted a nine-day advance Tuesday. 

Tesla Inc. and Alphabet Inc. are reporting Wednesday. The Magnificent Seven companies are expected to post a combined 14% rise in second-quarter profits, while earnings for the rest of the US equity benchmark are predicted to be relatively flat, according to Bloomberg Intelligence data.

Attention in Japan will also be on the 40-year government bond auction on Wednesday. That will be the first test of appetite for super-long debt following a historic election defeat for Ishiba when his ruling coalition failed to win a majority in the upper house at a vote on Sunday. 

Investors remain concerned over the outlook of bonds in one of the most indebted developed nations amid expectations of higher government spending as Ishiba tries to placate disaffected voters. 

Ishiba will announce his resignation by the end of August, Mainichi reported, without attribution. The prime minister plans to make a final decision on his future next month, Sankei reported earlier.

Meanwhile, US Treasury Secretary Scott Bessent said he will meet his Chinese counterparts for trade talks in Stockholm next week, and will “be working out what is likely an extension” to the current Aug. 12 deadline for negotiations. He also said that the negotiations with China can now take on a broader array of topics, potentially including Beijing’s continued purchases of “sanctioned” oil from Russia and Iran.

Bessent told Fox Business he saw no reason for Fed Chair Jerome Powell to step down. Meanwhile, Trump stressed his belief that the Fed’s benchmark rate should be 3 percentage points lower. Bessent, in the same Oval Office event, said that “based on the way they cut rates last fall, they should be cutting rates now.”

Some of the main moves in markets:

Stocks

S&P 500 futures rose 0.2% as of 11:34 a.m. Tokyo timeJapan’s Topix rose 3.1%Australia’s S&P/ASX 200 rose 0.6%Hong Kong’s Hang Seng rose 0.5%The Shanghai Composite rose 0.4%Euro Stoxx 50 futures rose 1%

Currencies

The Bloomberg Dollar Spot Index rose 0.1%The euro fell 0.2% to $1.1734The Japanese yen fell 0.3% to 147.10 per dollarThe offshore yuan was little changed at 7.1720 per dollar

Cryptocurrencies

Bitcoin fell 0.3% to $119,377.01Ether rose 1.4% to $3,758.56

Bonds

The yield on 10-year Treasuries advanced two basis points to 4.36%Japan’s 10-year yield advanced 9.5 basis points to 1.595%Australia’s 10-year yield declined two basis points to 4.29%

Commodities

West Texas Intermediate crude rose 0.5% to $65.62 a barrelSpot gold fell 0.3% to $3,420.69 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Alice French, Winnie Hsu, Shikhar Balwani, Aya Wagatsuma and Joanne Wong.

©2025 Bloomberg L.P.