FTSE 100 Reaches All-Time High After US-Japan Trade Deal Boosts Markets

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy. Financial markets are cheering the news that Donald Trump has announced a trade deal with Japan. Stocks are surging in Tokyo, where the Nikkei index has jumped by 3.75% and the wider Topix has rallied by 3.55%. Other markets across Asia-Pacific are also higher, while the relief rally could drive Britain’s FTSE 100 to a new record high when trading begins.

Under the deal, Japanese goods will incur a 15% tariff at the US border, below the 25% level which Trump had threatened to impose from 1 August earlier this month (but still above Trump’s ‘baseline’ tariff of 10%). Announcing the deal, Trump declared on Truth Social: 'We just completed a massive Deal with Japan, perhaps the largest Deal ever made. Japan will invest, at my direction, $550 Billion Dollars into the United States, which will receive 90% of the Profits. This Deal will create Hundreds of Thousands of Jobs — There has never been anything like it. Perhaps most importantly, Japan will open their Country to Trade including Cars and Trucks, Rice and certain other Agricultural Products, and other things.'

The breakthrough is lifting hopes that more countries will reach trade deals with the US, and avoid the hefty tariffs threatened by Trump. Tony Sycamore, market analyst at IG, explains: 'While the details of the Japan trade deal are still limited and there may be some disagreement from the Japanese side, on face value, the deal announced this morning appears to be a positive outcome for markets overall, as it is well below the 25% level previously threatened. Furthermore, this morning’s trade deal with Japan becomes the sixth US trade agreement in recent months, following deals with Britain, Vietnam, the Philippines, Indonesia, and China. US Treasury Secretary Scott Bessent is scheduled to meet with his Chinese counterpart next week to discuss extending the August 12 deadline for tariffs on Chinese imports. Reaching an agreement there would significantly help to defuse the impact and lessen the importance of the August 1 deadline. Trade deal progress with the EU before the August 1 deadline would make the date a non-event.'