U.S.-Japan trade agreement boosts stock market to new heights
In a significant development, the US and Japan have reached a trade agreement that has had a positive impact on the global stock markets, particularly on key US indices. Following the announcement, the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all experienced record-setting gains.
The S&P 500 rose by 49.29 points to 6,358.91, setting a new high. The Dow Jones Industrial Average increased by 507.85 points to 45,010.29, marking a significant 1% jump. The Nasdaq Composite gained 127.33 points to 21,020.02 (+0.6%) on the deal optimism.
The trade deal, which lowers Japanese tariffs from 25% to 15% including on automobiles, has restored investor confidence and helped dissipate major uncertainties. This deal has benefited Japanese equities and US manufacturers linked to sectors like semiconductors, AI, and biotech. The deal sparked a relief rally in carmaker stocks, previously among the weakest performers.
The agreement also boosted the outlook for further trade agreements, amplifying optimism in US markets. The trade deal between the US and Japan can translate into better economic activity and corporate earnings, reflecting in the record-setting gains in the major US stock indices.
Meanwhile, Hasbro took a $1-billion, non-cash hit to its results for the spring to write down the value of some of its assets following a review triggered by the implementation of tariffs. On the other hand, GE Vernova, an energy company, delivered a stronger profit than analysts expected and raised its forecasts for revenue from its power and electrification businesses. GE Vernova revised its expected impact of tariffs to be around $300 million to $400 million, net of mitigating actions.
Japan's market was the biggest winner among foreign indexes, with the Nikkei 225 rallying significantly. However, Texas Instruments' stock fell despite delivering results for the latest quarter that were above analysts' expectations. Conversely, GoPro's stock increased by 12.4%, while Krispy Kreme's stock rose 4.6% despite a 58.4% loss for the year so far.
In a separate development, Lamb Weston announced a plan to cut at least $250 million in costs, including a 4% reduction in workforce and other measures. Opendoor Technologies fell 20.3% after more than tripling between the last two Mondays.
The trade deal between the US and Japan marks a step towards improved trade relations, and the positive impact on the stock markets is a clear indication of the investor sentiment and expectations of a better economic future.
- The positive impact of the US-Japan trade agreement on the global stock market is evident in California, where the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all set new records.
- The agreement has not only boosted the outlook for further trade agreements but also benefits specific sectors like semiconductors, AI, and biotech, which are linked to US manufacturers.
- Meanwhile, investor sentiment extends beyond US markets, as Japan's Nikkei 225 rallies significantly due to the deal, indicating a global positive outlook on the economy and finance.
