FX.co ★ Japanese Shares Extend Rally on Trade Optimism

The Nikkei 225 Index surged by 1.1%, climbing above the 41,600 mark, while the more comprehensive Topix Index rose by 1.5% to reach 2,970 on Thursday. This marks an all-time high for the Topix Index, buoyed by the recently unveiled trade agreement between the United States and Japan, which has provided continued support for market optimism. The agreement results in Japan facing a 15% tariff on its exports to the US, a significant reduction from the 25% tariff previously threatened by the Trump administration earlier this month. Additionally, global market sentiment received a boost from reports indicating progress in US-EU trade negotiations. Domestically, Japan's private sector growth remained stable in July. The continued robustness in the services sector effectively balanced a slowdown in manufacturing. The day's gains were primarily driven by industrial and financial sectors, with notable performances from Mitsubishi Heavy (+4.4%), Fujikura (+2.9%), Mitsubishi UFJ (+2.7%), Mizuho Financial (+3%), and Sumitomo Mitsui (+3.3%).