German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, July 11, 2025. REUTERS/staff/File Photo Purchase Licensing Rights , opens new tab

Summary

Companies Euro STOXX 600 adds 1%; auto shares jump

Asia, EU shares relieved by US-Japan trade deal

U.S.-China to discuss tariff extension in Stockholm

Wall Street restrained ahead of Google, Tesla results

LONDON/SYDNEY, July 23 (Reuters) – European shares climbed on Wednesday, buoyed by hopes of a trade agreement between the European Union and United States after Japan struck a deal that lowers tariffs on its autos, sending Japanese stocks to a one-year high.

President Donald Trump on Tuesday said a trade deal with Tokyo will include Japan paying a lower-than-threatened 15% tariff on shipments to the U.S. It followed an agreement with the Philippines that will see the U.S. collect a 19% tariff rate on imports from there.

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Trump also said EU representatives were coming for trade negotiations on Wednesday. That stirred hopes for a deal with Europe, even as the EU was reportedly refining countermeasures in case of a deadlock before the August 1 deadline.

The trade deal news has “raised hopes that the U.S. might be about to reach deals with other countries that avoid the higher tariffs on August 1,” Deutsche Bank analysts wrote in a note.

On Wall Street, S&P 500 futures were up 0.2%, while Nasdaq futures added 0.1%.

South Korean automakers also rose as the Japan deal fuelled optimism over potential progress in tariff negotiations between South Korea and the United States.

The dollar remained weak, having lost ground overnight.

It traded flat at 146.71 yen after sliding 0.5% on Tuesday. The dollar index , which tracks the currency against major peers, was little changed at 97.48.

Analysts noted the trade deal reduced a major risk to the fragile Japanese economy, providing more scope for the Bank of Japan to raise interest rates to fight inflation.

That hit the bond market, with yields for 10-year JGBs rising 8.5 basis points to 1.585%.

Japan’s Prime Minister Shigeru Ishiba denied reports he planned to step down following a bruising upper house election defeat. Ishiba said media reports that he had already decided to resign were “completely unfounded.”

EXTENDED DEADLINES

In another positive development, U.S. and Chinese officials will meet in Stockholm next week to discuss an extension to the August 12 deadline for negotiating a trade deal, Treasury Secretary Scott Bessent said.

U.S. corporate earnings reports were showing signs that Trump’s trade war was hitting profit margins. General Motors (GM.N) , opens new tab tumbled 8.1% after the automaker reported a $1 billion hit from tariffs to its quarterly results.

Elsewhere, the euro dipped 0.1% to $1.1737, after rising 0.5% the previous day. The European Central Bank is expected to hold rates steady on Thursday after eight consecutive rate cuts.

Oil prices nudged higher, helped by rising prices for diesel in the U.S., where stockpiles are at their lowest levels for this time of the year since 1996.

U.S. crude rose 0.3% to $65.48 per barrel, while Brent was at $68.77 per barrel, up 0.2%.

Reporting by Tom Wilson in London and Stella Qiu and Wayne Cole in Sydney; Editing by Shri Navaratnam, Kim Coghill and Jane Merriman

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