Japan deal helps auto sector, but Trump still in the driving seat
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What is the new Japan‑US auto tariff deal and why does it matter?
Japan has a trade deal with the US which has lowered the tariff on cars. Could the EU be on the verge of signing a similar deal with a baseline tariff of 15%? It does look like 15% is the new 10%, except for the UK, of course, where Donald Trump is heading off to on Friday for four days. That's a lot of golf. And it's PMI day today. What's the story from purchasing managers about how things are right now in Europe and in the United States? Also, the ECB today and Tesla and Alphabet earnings. It's Thursday, the 24th of July, 2025. It's the morning call from NAB. Good morning. Well, U.S. equities have pushed higher at 1.1% for the Dow at the close, 0.8% for the S&P. Another new high today, 0.6% for the Nasdaq and the Russell 2000 at 1.5%.
All sectors doing well except for consumer staples. And European stocks have been doing well as well, up 1% for the Eurostoxx 50 at the close there, 1.4% for the CAC Carant, 0.8% for the DAX and 0.4% for the FTSE 100. Bond yields are higher, up three basis points for 10-year treasuries. Japanese 10-year bonds are up seven basis points, up five in Germany, six in the UK, four in France. Aussie 10-year yields were at 4.29% yesterday, now on futures this morning, up six basis points from that. US dollar is a bit lower, down 0.2% on the DXY. The yen is up by about the same amount. The big winner has been actually the Aussie dollar, which is up 0.6%, almost at 66 US cents. The pound is up 0.3%. The euro is up just 0.1%.
And oil, marginally lower, but, you know, we are talking the fraction of a percentage. So let's just ignore that and move on to the main story of the day with NAB's Gavin Friend in London. japan has a trade deal even with all the political uncertainty they've got over there a deal has been done even if the deal does seem a little bit sketchy at this stage
morning phil yeah there's nothing like a trade deal with a big trading nation and actually deals with the philippines and indonesia and the prospect but potentially if a deal in the offing for europe for markets to uh you know throw it throw away all the caution we've we want to you know, a really strong run with equities anyway, aren't we? So, and that's added to that. So, you know, yields higher and everything seems rosy at the moment. Hence, you know, the Aussie and some of these risk currencies, you know, Euro approaching 118 again.
How did Gavin Friend explain the mechanics of the 15% tariff reduction?
What could possibly go wrong?
Well, maybe the detail of the deal might change things because we don't know fully, do we? Although we do know 15% tax on Japanese cars, which was 25% previously. So, I mean, that certainly did help the Nikkei when that news was released. That shot up about 3.5%.
Yeah, I mean, this has been, you know, I think the markets were very pleasantly surprised because this has been a protracted and difficult set of discussions with Japan, not least because, you know, other things are going on, Japanese political circles and the yield curve and bits and pieces. And obviously the loss of the, you know, the loss of the upper house to the governing coalition over the weekend. But, you know, back to that deal, you know, it's 15%, as you say, and Japan said it will open up its economy, its markets to US exports, cars, rice, which, you know, Japan's running a bit short of domestically, other sort of agricultural products. the US, of course, doesn't pay anything for its exports to Japan.
This is a common theme with all the deals that the US seems to be doing. The US, you know, realises, I think, that we're listening to some comments from Howard Lutnick, the Commerce Secretary today, and it was pretty clear, actually, that the U.S. realises Japan will never really open up in accepting U.S. goods to U.S. safety standards. And Japan, on the other side, doesn't want to encourage too much inflows of rice, otherwise it will enrage local domestic rice farmers. So what has happened is Japan sought to find ways What did it need to do to secure a lower tariff? Because auto tariffs, you know, in the auto industry is very important. Those exports into the U.S.
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Chapters
8 chapters
1
What is the new Japan‑US auto tariff deal and why does it matter?
0:01–2:31
2
How did Gavin Friend explain the mechanics of the 15% tariff reduction?
2:31–4:54
3
Why could the Japan deal increase pressure on Prime Minister Shigeru Ishiba?
4:54–7:24
4
Is the European Union likely to secure a similar 15% auto tariff?
7:24–9:40
5
What are the immediate market reactions to the trade news (stocks, bonds, currencies)?
9:40–11:29
6
Why did Tesla’s shares rise while Alphabet’s fell after earnings?
11:29–14:03
7
How are central‑bank policies (ECB, RBA, RBNZ) shaping today’s market outlook?
14:03–16:25
8
What are the key takeaways for investors heading into the next trading day?
16:25–19:10