Investors were also cheered by news that Washington had reached agreements with Indonesia and the Philippines, stoking optimism that more countries will follow suit before Trump’s August 1 deadline.
“News of a trade agreement between the US and Japan is fostering optimism among investors that further deals might be reached before punishing tariffs come into force,” said AJ Bell investment director Russ Mould.
Wall Street pushed higher, with the Dow rising more than one percent and the S&P 500 and Nasdaq both powering to fresh all-time closing records.
In Europe, London’s FTSE 100 ended the day up 0.4%, after hitting another record high at the open.
Paris piled on 1.4% and Frankfurt also advanced, tracking gains in Asia.
Tokyo surged over 3% after the US president announced a deal lowering tariffs on some Japanese goods to 15%, down from the threatened 25%.
The deal will also reduce tolls on autos – a sector accounting for 8% of Japanese jobs – to 15%, compared with 25% for other countries.
In return, Japan pledged to invest US$550 billion in the United States, Trump said on social media.
Shares in carmaker Toyota rocketed higher by more than 14%, Mitsubishi 13% and Nissan 8%.
European carmakers also rallied, Stellantis jumping around nine percent in Paris.
Shares in German automakers BMW, Mercedes Benz, Porsche and Volkswagen all rose more than 4%.
The deal is providing optimism that other countries can “seal good deals if they pledge investment into the US”, said Kathleen Brooks, research director at trading group XTB.
Trump also hailed an agreement with Manila to lower levies on Philippine goods by one percentage point to 19%, while tariffs on Indonesia were slashed from 32% to 19%.
Shares in Manila and Jakarta rallied.
The announcements boosted hopes of other deals before next Friday’s deadline, though talks with the European Union and South Korea remain unresolved.
US treasury secretary Scott Bessent said Wednesday that Washington was making progress on tariff negotiations with the European Union, with talks planned later in the day between the bloc’s top trade negotiator and his American counterpart.
Japan’s 10-year government bond yield soared to the highest since 2008 after media speculation that Prime Minister Shigeru Ishiba would resign after a weekend election debacle. He denied the reports.
Elsewhere in Asia, Hong Kong hit its highest level since late 2021, while Shanghai was flat.