FTSE 100 hits record high as US-Japan trade deal sparks global rally

​​​US-Japan trade deal drives record-breaking session

​The FTSE 100 opened at a fresh record high, rising 0.5% as markets welcomed news of a US-Japan trade agreement. The deal, which imposes 15% tariffs instead of the threatened 25%, provided immediate relief to investors across global markets.

​President Trump announced the agreement after intensive negotiations, stating "it's a great deal for everybody." The deal includes a $550 billion investment fund for US projects, demonstrating the substantial economic cooperation between the two nations.

​UK markets joined a broader European rally, with the Stoxx 600 gaining 0.8%. However, the FTSE 100's gains lagged behind European peers, continuing a familiar pattern where UK stocks underperform during risk-on sessions.

​The agreement sparked particular optimism that similar deals might be reached with other trading partners, including the European Union. This prospect of reduced trade tensions provided a significant boost to market sentiment globally.

​Automotive sector leads European surge

​European automotive stocks experienced the strongest reaction to the trade deal, with the Stoxx 600 auto subindex jumping 4% - its biggest daily gain since June. Porsche, Stellantis and Mercedes-Benz led the charge among continental manufacturers.

​In London, Aston Martin shares rose around 4% as investors priced in potential benefits from reduced trade barriers. The positive reaction reflects hopes that European carmakers might secure similar favourable treatment in future negotiations.

​Japanese carmakers had shown even stronger gains earlier in the session, with the Nikkei 225 surging nearly 4%. Analysts at Oddo noted that the deal provides crucial clarity on tariffs and will significantly improve Japanese export competitiveness.

​The automotive rally demonstrates how specific sectors can benefit disproportionately from trade agreements. Companies with significant international exposure and complex supply chains stand to gain most from reduced trade friction.

​UK gilts sell off as yields rise across curve

​UK government bonds experienced selling pressure alongside broader European debt markets, with yields rising across the curve. The gilt selloff underperformed European peers, suggesting specific concerns about UK fiscal policy and economic outlook.

​European bond yields rose more sharply at the long end, with some impact stemming from movements in Japanese government bonds. Japan's 40-year bond auction showed its weakest demand since 2011 amid fiscal spending concerns.

​The bond market reaction reflects shifting investor sentiment away from safe-haven assets and towards riskier investments. This rotation typically occurs when trade tensions ease and economic growth prospects improve.

​Japanese yields rose by as much as nine basis points across the curve, creating ripple effects in European debt markets. Political uncertainty surrounding Prime Minister Ishiba, who faces pressure to resign, added to Japanese bond market volatility.

​Mixed performance among individual UK stocks

​Informa emerged as the FTSE 100's top performer, surging 6.7% to its highest level since February after upgrading revenue guidance. The publisher raised its underlying sales growth forecast to above 6%, driven by strong performance in its live events division.

​The company reported 20% revenue growth and higher operating margins that beat analyst estimates. However, it maintained unchanged reported sales targets due to adverse impacts from a weakening US dollar, highlighting currency translation challenges.

JD Wetherspoon shares gained after reporting sales volumes above pre-pandemic levels, with like-for-like sales growing 5.1%. Chairman Tim Martin noted particularly strong performance in breakfasts and chicken, with spirits showing improvement.

​Fresnillo faced profit-taking despite reaffirming production forecasts, with shares falling 5.4%. The precious metals miner remains the FTSE 100's top performer this year with 136% gains, making it vulnerable to tactical selling pressure.

​Mining stocks weigh as safe-haven demand fades

​Precious metals miners faced selling pressure as the broader risk rally reduced demand for safe-haven assets. Fresnillo led declines among mining companies, with smaller peer Hochschild also falling after its production update.

​The mining sector's weakness demonstrates how changing market sentiment can quickly shift sector leadership. Companies that benefited from safe-haven flows earlier in the year now face headwinds as investors embrace riskier assets.

Gold and silver prices came under pressure as investors rotated out of defensive positions. This shift reflects growing confidence that trade tensions may be easing, reducing the need for portfolio hedging through precious metals exposure.

​The sector's underperformance partially offset broader market gains, contributing to the FTSE 100's more modest advance compared to continental European indices. This highlights how sector composition can influence index performance during different market phases.