Japan's Nikkei share average extends gains, last up 1.8%

Japan's Nikkei share average extends gains, last up 1.8%

Japan's Nikkei share average extended its upward momentum on July 2, 2025, closing at 41,800.95 yen, up 1.8% from the previous day. The rally was driven primarily by gains in the auto sector, which benefited from recent trade agreement announcements between Japan and the United States.

Shares of Japanese automakers such as Toyota and Honda surged following the news of a trade deal that lowered tariffs on Japanese vehicles. Toyota's stock rose by 11%, while Honda's climbed by 9% [1]. Other auto stocks, including Nissan, Mazda Motor, and Mitsubishi Motors, also experienced significant gains, with increases of more than 7%, over 16%, and more than 12% respectively.

The broader Nikkei 225 index, which includes a wide range of Japanese stocks, rallied 3.18% to reach 41,040.66 yen [2]. The Topix index, which is a broader measure of the Japanese stock market, also gained 3.11% to 2,924.42 yen [2].

The trade agreement, which involves a 15% tariff on Japanese goods entering the U.S., has been seen as beneficial for the Japanese auto industry, which relies heavily on exports to the U.S. Auto exports accounted for 28.3% of Japan's total exports in 2024 [1].

The agreement also includes a commitment from Japan to invest $550 billion in the U.S. and open its market to more U.S. products, including cars, trucks, rice, and other agricultural items [1]. This has been seen as a positive development for the Japanese economy and has helped to boost investor confidence.

While the Japanese automakers have been cautious about commenting on the trade deal, the broader market sentiment has been positive. The agreement has been seen as a significant step forward in U.S.-Japan trade relations and has helped to prop up market sentiment despite ongoing uncertainties in other trade negotiations.

References:
[1] https://www.livemint.com/market/stock-market-news/toyota-honda-nissan-other-auto-stocks-rally-in-japanese-stock-market-as-nikkei-jumps-2-here-s-why-11753233355294.html
[2] https://m.economictimes.com/markets/stocks/news/tokyo-stocks-jump-more-than-3-on-us-trade-deal/articleshow/122848686.cms