Asian equities opened higher on Tuesday as news of a US–Japan trade agreement sparked optimism across regional indices, boosting investor sentiment and driving early gains in key markets.
Japan leads the surge
The Nikkei 225 surged by over 3% in early trading, outperforming regional peers after the announcement that US tariffs on Japanese car exports would be capped at 15%, down from a previously threatened 25%. The decision provided immediate relief to Japan’s automotive sector, with shares in Toyota, Mazda, and Nissan all posting sharp gains. Market analysts in Tokyo pointed to renewed confidence in Japan–US trade relations and an easing of bilateral tensions that have weighed on export-heavy industries.
Strong performance across Asia
Elsewhere in Asia, the rally extended to Hong Kong, South Korea and mainland China. The Hang Seng Index rose by more than 1%, supported by financial and tech stocks. In Seoul, the Kospi gained close to 1%, while Shanghai’s Composite Index advanced nearly 0.8%, reflecting broader confidence in regional growth momentum. Australia’s ASX 200 also edged up, though gains were more modest amid mixed commodity prices.
India joins the upward trend
In India, the Sensex opened 0.3% higher, adding over 150 points as investor mood mirrored broader Asian trends. The Nifty 50 traded above the 25,100 level in early action, led by banking and consumer goods stocks. Analysts noted that the US–Japan deal indirectly benefits emerging markets by reinforcing trade stability and reducing volatility in global supply chains, especially in the wake of ongoing geopolitical uncertainties.
Currency and bond movements
In currency markets, the yen weakened slightly against the dollar as risk appetite returned and expectations grew for further easing from the Bank of Japan. Regional currencies showed mild appreciation against the greenback, with the South Korean won and Indian rupee both gaining ground. Government bond yields in Japan ticked up, in line with risk-on market conditions and improved growth prospects.
Looking ahead
Market watchers now shift focus to the upcoming trade discussions between the US and China scheduled for later this week. The surprise accord with Japan has raised hopes of similar progress with Beijing, though significant differences remain on key issues. Meanwhile, the latest round of corporate earnings in Asia will be scrutinised for signs of how businesses are responding to easing trade headwinds and resurgent demand.
REFH – Newshub, 23 July 2025
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