Nikkei Index jumps to one-year highs above 41,000 after the US-Japan deal

• The Nikkei Index rallied 3.5%on Wednesday following Japan's trade deal with the US.
• Japanese imports will be subject to 15% tariffs, down from the 25% levies announced on July 7.
• Automakers have been the best performers with shares of Mazda jumping nearly 18% in one day.

The Nikkei Index was the strongest performer among the world's leading stock indexes during a risk-on session on Wednesday. The trade deal between the US and Japan boosted a 3.5% rally in the Japanese Index, with automaker stocks leading gains.

US President Trump surprised traders late Tuesday, announcing a "massive deal" with Japan that reduces levies to imports from the Asian country to 15%, down from the 25% levy set on July 7. In exchange, Japan is expected to invest $550 billion in the United States.

The Japanese Nikkei Index rallied from the opening bell, with automakers celebrating the news. Mazda was the best performer, with a 17.7% rally, while shares of other car makers like Subaru rallied 16.6% and Toyota surged 14.34% on the day.

Beyond that, Prime Minister Ishiba denied reports from local newspapers suggesting that he would resign in August, which eased concerns about political uncertainty, and the BoJ Deputy Governour Uchida reiterated the bank's cautious stance towards further rate hikes, suggesting that monetary policy will remain accommodative for some time, a favourable environment for equity markets.