Stock markets in Europe experience an uptick as a result of a new trade agreement with Japan, boosting investor confidence.
The U.S.-Japan trade agreement, finalised in July 2025, has marked a significant shift in economic and strategic ties across the Pacific. The deal, which reduces tariffs on Japanese imports to the U.S. from 25% to 15%, has particularly impacted cars and auto parts, and opened Japan's agricultural markets, including rice and beef, to U.S. products.
Key trends and impacts include a boost to Japanese automaker stocks like Toyota and Honda, which saw share price gains of around 9-10% post-announcement. The U.S. agricultural sector is expected to benefit from Japan's market liberalization, potentially increasing U.S. rice exports to Japan by 300%.
Japanese banking stocks also rallied to a four-month high, as the trade deal coupled with Bank of Japan’s rate hikes is expected to boost their profitability through increased net interest income. Asian equities, including Japan’s Nikkei 225, reacted positively, with the index rallying over 3.5% immediately after the deal.
However, the direct impacts on the German market are less explicitly detailed. Given Germany’s strong automotive export sector, especially companies with supply chains or sales interests in both the U.S. and Japan, the reduction in U.S. tariffs on Japanese cars could increase competitive pressure on German automakers in the American market. Exchange rates and global trade flows influenced by the U.S.-Japan deal might indirectly affect German exporters, but concrete stock market impacts would require more detailed sector-specific analysis and data.
Meanwhile, the Euro Stoxx 50 Index has a slightly better performance, lying at 5,345 points. The Dax, a German stock market index, has risen by 0.7% to 24,208 points. In the Dax, Continental rose by 3.4%, and BMW showed a gain of 4.3%.
SAP, a major German company, reported continued growth in its cloud business but did not raise its full-year profit target as some investors had hoped. Analysts from Raiffeisen Research summarise that high revenue expectations were narrowly missed by SAP, while analysts from Baader Helvea note a "solid increase in the operating margin" for the company.
These trends and impacts reflect the latest information as of July 2025, and further market movements could clarify the longer-term consequences. The relief at the tariff front following the US-Japan trade deal is driving the automotive sector, with the euro trading at 1.1745 dollars, 0.1% lower than on Tuesday, and the ten-year Bund yield currently at 2.61%, up from 2.59% at the close on Tuesday.
The U.S.-Japan trade agreement, by reducing tariffs on Japanese imports, has positively impacted businesses in both countries. For instance, Japanese automaker stocks, such as Toyota and Honda, experienced share price increases. The deal also opened Japan's agricultural markets, potentially improving exports of U.S. rice to Japan. The German market, however, may face increased competitive pressure in the American automotive sector due to the tariff reduction. This competition could potentially affect German-based companies like BMW and Continental. Furthermore, the financial sector, such as the Euro Stoxx 50 Index and individual stocks like SAP, have shown mixed performances following the agreement.
