FTSE 100 hits all-time high as trade deal hopes lift global markets
The FTSE 100 closed at another all-time high on Wednesday on hopes the United States’ trade deal with Japan would spark a flurry of similar pacts between the Trump administration and America’s largest trading partners.
London’s blue-chip index closed up 0.5 per cent to hit a record high of 9080 points, in the latest and clearest sign yet of UK stocks’ resurgence over 2025.
The Footsie is now up over 10 per cent this year, and passed 9,000 points for the first time in its history last week. Analysts have attributed its stellar year to a combination of historically low valuations luring value-hunting investors and the index’s defensive constituents being beneficiaries of the geopolitical uncertainty that has plagued the global economy this year.
Similar rallies took place on most major indexes, as risk-on sentiment swept across the financial markets on the deal announced by the US and Japan to minimise tariffs imposed on Japanese goods entering America.
Japan had been singled out by Donald Trump as overseeing one of the most egregious trade imbalances with the United States when the President announced his so-called reciprocal tariff regime in April.
The US was originally planning to subject the Asian country to tariffs of 24 per cent on all goods it exported to America. But the deal announced by Trump and Japanese Prime Minister Shigeru Ishiba brought the charge down to 14 per cent ahead of the deadline set by Trump.
In return, Japan agreed to invest $550bn (£407bn) directly into the US economy, in an agreement Trump branded “the largest trade deal in history”.
‘Good vibes’ on FTSE 100
The Japanese Nikkei rose sharply on the news, closing up over 3.5 per cent as fears the worst of Trump’s tariff regime had been abated by the deal. Carmakers were the biggest risers across the country’s blue-chip index, with shares in Toyota jumping by more than 14 per cent.
The index’s rally sparked similar moves on Europe’s biggest bourses, as the Japan deal sparked hopes that European lawmakers might strike a similar pact with the US. As well as the FTSE 100’s gains, Paris’s Cac 40 rose 1.4 per cent over the day, while the German Dax rose by 0.8 per cent.
Laith Khalaf, head of investment analysis at AJ Bell said the US-Japan deal brought “some good vibes to markets”.
“The longer term effect of tariffs remains to be seen but for the moment, markets seem happy to cheer the home runs and ignore the misses,” she said.
The Financial Times reported after European markets closed on Tuesday that the European Union was close to agreeing a similar deal to Japan’s, which would see the bloc’s tariffs on exports to America brought down to 15 per cent.
But Deutsche Bank warned traders might still be underpricing the prospect of tariffs suddenly ratcheting up across the global economy when Trump’s deadline for negotiations passes on 1 August.
Jim Reid, a market strategist at the German lender, said the threat of higher trade levies “remains for several large economies” including Brazil and Canada.
“There’s also the pledge of higher sectoral tariffs, including 50 per cent on copper, so this is far from the end just yet, and those tariffs would each have a significant impact if they did come in,” he said.