A cloud of uncertainty that has long shadowed the global trade landscape has finally lifted, as President Donald Trump signed an executive order formalizing a landmark trade pact with Japan, unleashing a powerful wave of relief that is sending Asian markets surging on Friday.
This stunning breakthrough, coupled with a record-setting close on Wall Street, has decisively broken the recent risk-off mood, even as a crucial test of the US economy looms.
The reaction in Tokyo was immediate and explosive.
Japan’s Nikkei 225 jumped 1.39 percent and the broader Topix added 0.86 percent after the White House confirmed that the punishing 27.5 percent tariff on Japanese auto imports would be lowered to 15 percent.
The order also cemented the agreement for a colossal 550 billion dollar package of Japanese investments into US projects, a major victory for both nations that has been months in the making.
An unlikely catalyst for a chip rally
Adding another layer of intrigue to the session, a separate move by the US president is fueling a rally in the region’s semiconductor stocks.
Trump announced on Thursday that his administration plans to slap new tariffs on semiconductor imports from any firm that does not move its production to the United States.
In a paradoxical reaction, the news, which puts the entire industry on notice, has sent shares of Asian chip giants like Advantest, TSMC, and SK Hynix climbing, as investors appear to be cheering the intense focus on the sector’s strategic importance.
A tale of two giants: a bullish India, a cautious China
While Japan is celebrating, a more complex picture is emerging elsewhere in the region.
Chinese stock markets, which fell sharply on Thursday amid fears that regulators were preparing to cool their red-hot rally, are trading with caution.
Hong Kong’s Hang Seng Index managed a modest 0.17 percent gain, while the mainland CSI 300 was flat.
In stark contrast, a bullish mood is taking hold on Dalal Street.
The Indian benchmark indices Sensex and Nifty are poised for a strong start, with optimism from recent “GST 2.0” reforms continuing to fuel buying interest.
The GIFT Nifty is indicating a solid 0.24 percent jump at the open.
This comes after a session where initial euphoria faded, but strong buying from domestic institutional investors, who pumped in 2,233 crore rupees, provided a formidable cushion against foreign outflows, setting the stage for a positive end to the week.
This broad Asian rally follows a powerful session on Wall Street, where the S&P 500 closed at its 21st record high of the year. But that optimism was built on the hope of a favorable US jobs report, due out later on Friday.
The data will provide the ultimate verdict on the health of the American economy and could determine whether this powerful, relief-driven rally has the legs to run into a new week.
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