Morning wrap (23.07.2025)

Market sentiment on Wall Street was mixed yesterday, with tech stocks weighing on the indices (Nasdaq: -0.4%, S&P 500: +0.05%, DJIA: +0.4%). Futures are currently up by 0.2–0.3%.

Donald Trump announced a trade deal with Japan overnight, with reciprocal tariff rate at 15% (including autos, which were previously facing a planned at 25%). In return, the Japanese are expected to invest an additional $550 billion in the U.S. Japanese Prime Minister Shigeru Ishiba confirmed the terms of the trade agreement, stating that close cooperation with the U.S. will continue.

The trade deal is fueling broad optimism in the Asia-Pacific region. Japan's Nikkei 225 is up slightly over 4%, while China's HSCEI (+0.7%), Hang Seng (+0.5%), Australia’s S&P/ASX 2000 (+0.4%), India’s Nifty 50, and South Korea’s Kospi (+0.2%) are also in positive territory.

Shares of Japanese automakers surged during the Asian session in response to the sectoral tariff cut from 25% to 15% (Toyota: +15%, Honda: +11%, Mazda: +17%, Nissan: +9%, Mitsubishi: +13%). The euphoria also spread to the South Korean market (Hyundai: +11%, Kia: +7%).

Japanese media reported that the Prime Minister of Japan is expected to announce his resignation by the end of July. Ishiba declined to comment, stating that he "can't say before scrutinising the trade deal".

In the forex market, the yen is the biggest loser (USDJPY: +0.25%, EURJPY: +0.18%, CHFJPY: +0.2%), reflecting market uncertainty in response to the overall trade deal with the U.S. Reduced uncertainty is benefiting Antipodean currencies the most (AUDUSD, NZDUSD: +0.4%). The U.S. Dollar Index (USDIDX) is rebounding by 0.2%. EURUSD is undergoing a 0.15% correction to 1.173.

Precious metals are mostly correcting after a broad decline in uncertainty. Gold is down 0.4% to $3,418 per ounce, silver is down 0.1% to $39.23 per ounce, while platinum is up 0.3%.

The latest API report showed a draw in crude oil inventories of 0.577 million barrels and gasoline of 1.228 million barrels, along with a build in distillates of 3.480 million barrels. WTI crude is rebounding 0.15% today.

Bitcoin is down 0.7% to $118,900, while Ethereum is rebounding 0.3% to $3,722.