Japan's election triggers cautious market response
LONDON : As far as investors are concerned, Japan's upper house election has been a sell on the rumour, buy (a little) on the fact.
Japanese markets are closed for the Marine Day public holiday, so liquidity has been lacking, but so far the yen is up a shade on the dollar and euro while Nikkei futures NKC1 traded in Chicago are much in line with Friday's cash close.
Wall Street futures are up a fraction, and European futures are down a touch.
While the ruling coalition lost control of the upper house by three seats, Prime Minister Shigeru Ishiba seems to be safe for now, though he will have to find support from minor parties to pass legislation.
The government can also continue its fraught tariff negotiations with the US administration.
The talks still seem deadlocked, partly over agricultural imports, which are politically and culturally very sensitive for Japan, as President Donald Trump's arbitrary Aug 1 deadline approaches fast.
The EU is in much the same situation. US commerce secretary Howard Lutnick says he's confident a deal can be struck, but the EU side is preparing a list of US products for retaliation levies.
The EU is also trying to use China as leverage with European Commission president Ursula von der Leyen and European Council president Antonio Costa meeting with President Xi Jinping there on Thursday.
Meanwhile, reports suggest Trump might meet Xi sometime in October or November, with the US already having allowed the export of chips to China apparently in return for a resumption of rare earth shipments.
Markets are assuming the worst will be avoided on tariffs, though analysts suspect the effective US tariff rate could well be a bit above the 1930's levies that contributed so much to the Great Depression.
Much of that optimism rests on earnings with the first of the megacaps reporting this week in the shape of Alphabet and Tesla.
Results from Lockheed Martin and General Dynamics should also confirm the windfall from a ramp up in global defence spending.
The diary for the rest of Monday is virtually blank, but there's always Trump to watch.
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New Straits Times
18 minutes ago
- New Straits Times
Trump says trade deal struck with Japan includes 15pct tariff
WASHINGTON/TOKYO: President Donald Trump on Tuesday said the US and Japan have struck a deal that will lower the hefty tariffs Trump had threatened to impose on goods from its Asian ally while extracting commitments for Japan to invest US$550 billion in the US and open its markets to American goods. The agreement - including a 15 per cent tariff on all imported Japanese goods, down from a proposed 25 per cernt - is the most significant of the string of trade deals the White House has reached ahead of an approaching August 1 deadline for higher levies to kick in. "This is a very exciting time for the United States of America, and especially for the fact that we will continue to always have a great relationship with the Country of Japan," Trump said on his Truth Social platform. Trump's announcement included few details, and he made no mention of easing tariffs on Japanese automobiles, which account for more than a quarter of all the country's exports to the United States and are subject to a 25 per cent tariff. The deal lowers the auto tariff to 15 per cent, according to industry and government officials briefed on the agreement. Two-way trade between the two countries totaled nearly US$230 billion in 2024, with Japan running a trade surplus of nearly US$70 billion. Japan is the fifth-largest US trading partner in goods, US Census Bureau data show. The announcement sent stocks in Japan higher, led by big gains in automakers as Honda, Toyota and Nissan all gained 8 per cent or more, and US equity index futures gained ground. The yen strengthened against the dollar. Reuters could not immediately confirm the elements of the deal announced by Trump, and details were scant. The White House did not immediately respond to a request for additional details. Speaking early on Wednesday in Tokyo, Japanese Prime Minister Shigeru Ishiba said he had received an initial report from his trade negotiator in Washington but declined to comment on the specifics of the negotiation. Ishiba is under intense political pressure in Japan, where the ruling coalition was set back by losing control of the upper house in an election on Sunday. Ishiba said he couldn't say how a trade deal would affect his decision on whether to step down from office until he saw the details. 'MISSON COMPLETE' Trump's announcement followed a meeting with Japan's top tariff negotiator, Ryosei Akazawa, at the White House on Tuesday, according to a person familiar with the matter. "#Mission Complete," Akazawa wrote on X. Kazutaka Maeda, an economist at Meiji Yasuda Research Institute, said that "with the 15 per cent tariff rate, I expect the Japanese economy to avoid recession." 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Trump has announced framework agreements with Britain, Vietnam, Indonesia and paused a tit-for-tat tariff battle with China, though details are still to be worked out with all of those countries. At the White House, Trump said negotiators from the European Union would be in Washington on Wednesday. Trump's announcement on Tuesday was of a pattern with some previous agreements. He announced the deal on social media shortly after a meeting or a phone call with a foreign official, leaving many key details a mystery, and before the other country issued its own proclamations. Nearly three weeks after Trump announced an agreement with Vietnam - in similar fashion - no formal statement has been released by either country spelling out the particulars of the deal that was ostensibly reached.
The Sun
18 minutes ago
- The Sun
Japan PM to review details of US trade deal announced by Trump
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The Star
an hour ago
- The Star
Nikkei rally buoys Asian shares as Trump announces Japan trade deal
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