Closing post
Time to wrap up…
Tom Hayes, the first banker jailed over the Libor interest rate-rigging scandal in 2015, has cleared his name after the UK’s supreme court overturned a decade-old conviction against the former UBS and Citigroup trader.
A panel of five justices, led by Lord Reed, concluded on Wednesday that the judge in Hayes’s original hearing 10 years ago had given “inaccurate and unfair” instructions to the jury that found him guilty on several charges of conspiracy to defraud. This meant the former banker was ultimately “deprived” of a fair trial.
The judges stopped short of fully exonerating Hayes, saying there was “ample evidence” that could have led a jury, if properly directed, to find him guilty. “But the jury was not properly directed,” the ruling explained, adding:
“The convictions are therefore unsafe and cannot stand.”
The court also quashed the conviction of the former Barclays trader Carlo Palombo, who was sentenced to four years in prison in 2019 for rigging Euribor – the euro version of Libor. It stated that Palombo’s original case was also compromised as a result of directions by the judge.
Palombo told reporters that the case had been a ‘Kafkaesque nightmare’.
Lawyers for the pair suggested there could now be a path for other convictions to be challenged.
Financial markets around the world have rallied after Donald Trump announced a trade deal with Japan to minimise the level of tariffs imposed on Japanese goods imported into the US.
Share prices rose sharply in Tokyo, where the Nikkei index of leading Japanese companies increased by 3.5%. European markets followed, with the FTSE 100 gaining 0.5% to hit a record high of 9080 points in London.
Shares in Japanese carmakers rallied sharply. Shares in Toyota, the world’s biggest carmaker, surged by more than 14% and there were gains for Honda, Mazda and Subaru. London-based companies with the highest exposures to US tariffs – including GSK, AstraZeneca and Diageo – were among the biggest risers on the FTSE 100.
The EU has threatened to impose nearly €100bn (£87bn) worth of tariffs on US imports ranging from bourbon whiskey and Boeing aircraft in one fell swoop if Donald Trump does not agree a trade deal by the end of next week.
The European Commission said on Wednesday it now planned to combine two previously prepared separate lists of US goods to be included in any retaliatory moves against the US president’s import tariffs.
If Brussels follows through on the threat, it would mean tariffs on US imports to the EU including poultry and alcohol in the first €21bn list, as well as the more recent list of €72bn of goods, which featured cars and planes.
In the defence world, the UK is due to manufacture dozens of Typhoon fighter jets for Turkey, after Germany dropped opposition to exports on human rights grounds.
Defence minister John Healey today signed a memorandum of understanding - a prelude to a formal deal - with his Turkish counterpart, Yaşar Güler, paving the way for the first order of British-made fighter jets since 2017.
Analysts have said Turkey could order as many as 40 planes. Manufacturer BAE Systems last week said the UK could sell up to 100 planes between Turkey, Qatar and Saudi Arabia.
The Typhoon is made by the Eurofighter consortium, with manufacturing shared between the UK, Germany, Italy and Spain. The UK, led by dominant weapons manufacturer, BAE Systems, produces 37% of the parts, as well as assembling the final plane for the UK and allies who order the planes via the British government. BAE last week said it was confident of securing more orders.
The order, if confirmed in the coming months, will secure manufacturing at Warton, Lancashire, where unions had raised concerns about the future of the assembly line, which has ground to a halt after the last of the UK orders.
While the exports are likely to be welcomed by workers at the plant, it would mean the UK would have to turn a blind eye to concerns over the increasingly authoritarian actions of Turkey’s president Recep Tayyip Erdoğan, whose main political rival was last week given a prison sentence.
Germany’s opposition had been a key factor preventing the export of Typhoons to Turkey and also to Saudi Arabia, after the 2018 murder of journalist Jamal Khashoggi allegedly on the orders of the Saudi crown prince, Mohammed bin Salman.
Keir Starmer said the government was determined to secure the Turkish orders and that they would “keep us and our allies safer during these uncertain times”.
He said:
“The UK’s production of Typhoon fighter jets is an engine for economic growth - supporting the lives and livelihoods of thousands of British people right across the UK.”
US existing home sales fall
US home sales fell last month, new data shows, in a sign that America’s housing market may be cooling.
Existing-home sales (ie, not new homes) decreased by 2.7% in June, according to the National Association of Realtors.
The NAR reports there were month-on-month sales falls in the Northeast, Midwest, and South, while they rose modestly in the West. Year-over-year, sales fell in the Northeast and West, while rising in the Midwest and South.
NAR chief economist Lawrence Yun says:
“Multiple years of undersupply are driving the record high home price. Home construction continues to lag population growth. This is holding back first-time home buyers from entering the market.
More supply is needed to increase the share of first-time homebuyers in the coming years even though some markets appear to have a temporary oversupply at the moment.”
Wall Street rises after US-Japan trade deal agreed
Over in New York, stocks have opened higher as investors welcome the US-Japan trade deal announced last night.
The Dow Jones industrial average has risen by 0.55% in early trading, gaining 244 points to 44,746 points.
The broader S&P 500 share index has risen by 0.35%, with the tech-focused Nasdaq index up 0.3%.
That’s a gentler reaction than in Tokyo, where the Nikkei index surged by 3.5% today.
Michał Jóźwiak, market analyst at global financial services firm Ebury, says:
“News of the long-awaited US-Japan trade deal represents a milestone in the president’s trade jigsaw, reinforcing the perception that the White House is open to compromise.
While the deal itself is not particularly surprising, the timing of the announcement is, as it comes a matter of only a few days after Prime Minister Ishiba’s coalition lost its majority in the upper house. The deal can be seen as a potential lifeline for Japan, as it represents a fairly significant concession from the Trump administration, while protecting the country’s vital automotive sector from harsher tariffs.”
Bessent: No rush to name Powell's successor
Treasury secretary Scott Bessent has also suggested the White House isn’t in a rush to name America’s next top banker.
Speaking to Bloomberg TV, Bessent said:
“I’m not going to talk about the process, but we are getting the process underway.
“Obviously it’s going to be President Trump’s decision, and we’re not in a rush.”
Pressure has been mounting on current Federal Reserve chair Jerome Powell, with Trump attacking him for not cutting interest rates.
Bessent suggested there were “a lot of strong candidates” to succeed Powell, including several people on the Fed’s main board, plus potentially regional bank presidents too.
EU prepares €100bn no-deal plan to match Trump’s threat of 30% tariffs
The EU has threatened to impose nearly €100bn (£87bn) worth of tariffs on US imports ranging from bourbon whiskey and Boeing aircraft in one fell swoop if Donald Trump does not agree a trade deal by the end of next week.
The European Commission said on Wednesday it now planned to combine two previously prepared separate lists of US goods to be included in any retaliatory moves against the US president’s import tariffs.
If Brussels follows through on the threat, it would mean tariffs on US imports to the EU including poultry and alcohol in the first €21bn list, as well as the more recent list of €72bn of goods, which featured cars and planes.
If agreed by EU member states, through a vote expected in the coming days, the €93bn of counter-tariffs could be imposed from 7 August…
You can read the judgement in Tom Hayes and Carlo Palombo’s cases here.
Judgment has been handed down this morning in the matter of R (Respondent) v Hayes (Appellant); R (Respondent) v Palombo (Appellant) UKSC 2024/0087; UKSC 2024/0088: https://t.co/YyIIzhK8TM. pic.twitter.com/Rq98pjmyxU
— UK Supreme Court (@UKSupremeCourt) July 23, 2025
The key to the decision to overturn the convictions is that the judge hearing the case erred by telling the jury at the Hayes trial that if any consideration had been given to whether the rate submitted would be to the commercial advantage of the bank or a trader, then, as a matter of law, the rate submitted could not for that reason be a genuine or honest answer to the question posed by the LIBOR definition.
Updated
Back in the world of the trade war, US treasury Secretary Scott Bessent has explained that Japan reached a trade deal with Donald Trump thanks to an innovative financing arrangement.
Speaking to Bloomberg TV, Bessent explained:
“They got the 15% rate because they were willing to provide this innovative financing mechanism.
“They came to us with the idea of a Japan-US partnership, where they are going to provide equity, credit guarantees and funding for major projects in the US.”
Asked whether Brussels had come up with a similarly innovative idea, Bessent replied:
“Not yet, but again, talks are going better than they had been.”
Updated
The quashing of Tom Hayes and Carlo Palombo’s convictions adds to the woes besetting the Serious Fraud Office, says Jonathan Fisher KC, Barrister at Red Lion Chambers.
Fisher explains:
The Supreme Court makes clear that the failure in this case stemmed from judicial error - specifically, the misdirection of the jury by treating as a matter of law something that is actually a matter of fact - but this does not exonerate the SFO completely. The Supreme Court criticised the SFO for not making clear the precise nature of its case from the outset.
This highlights just how challenging it is to prosecute financial market fraud cases in the criminal courts. This isn’t just an issue in the UK - only last week in the United States, former HSBC trader Mark Johnson had his fraud conviction overturned after a nine-year struggle. So today’s ruling is not in isolation - it reflects the broader reality that these cases are inherently complex and much careful thought needs to be given before a decision to prosecute is taken. The consequences of a failed prosecution can be devastating for the individual involved.
In this case it is extremely troubling that both defendants spent time in prison when, as the Supreme Court has now made clear, they shouldn’t have.
Today’s Supreme Court Judgment is “a personal triumph” for Tom Hayes and for Carlo Palombo, says Maia Cohen-Lask, partner at law firm Corker Binning.
Cohen-Lask explains:
Both have long contended that they were unfairly scapegoated for behaviour that was not only endemic in the City in the early 2000s, but also in government during the banking crisis in 2008.
“The judgment does not go so far as to exonerate them (indeed the judgment states that there was “ample evidence” on which a jury could have convicted). However, the judgment is a comprehensive vindication of the argument Hayes and Palombo have been making for many years: that if a LIBOR / EURIBOR submission was influenced by trading advantage, it could still be a genuine and honest answer to the question posed by the definition.
“Despite calls for an investigation into the wider aspects of rate manipulation and the role of large banks in the early 2000s and the Treasury in 2008, it is unlikely that these calls will be heeded by those with the power to act. After all, LIBOR as a means of setting reference rates has been replaced and reforms to EURIBOR have radically altered its operation, so it could be argued that remediation has already occurred. In my view, the judgment will bring to an end a murky period without further light being cast through the lens of an independent inquiry.”
Today’s press conference heard criticism of the Serious Fraud Office’s role in the Libor convictions.
Tom Hayes’s lawyer, Karen Todner, has explained that today’s Supreme Court judgment is critical of the drafting of the indictment by the SFO and their team.
She added:
The prosecution of individuals by organisations other than the CPS - I include in this as well as the SFO, the Post Office and the RSPCA - should be removed. The only body who should be bringing criminal prosecutions in the United Kingdom are the Crown Prosecution Service.
The dual role of the SFO as investigator and prosecutor creates a substantial conflict of interest which creates miscarriages of justice.
Apple and Google face more UK antitrust scrutiny
Away from the Supreme Court ruling…. Britain’s competition regulator said it plans to designate Apple and Google with so-called strategic market status for their role in mobile ecosystems.
The move comes as the CMA steps up its scrutiny of what it calls the two companies’ ‘duopoly’, Reuters reports.
The plans announced today that a number of markets relating to mobile internet browsers were not working well for consumers or businesses.
Apple’s Safari and Google’s Chrome dominate the mobile browser market on iPhones and Android devices, respectively.
CMA head Sarah Cardell said in a statement:
“Apple and Google’s mobile platforms are both critical to the UK economy ... but our investigation so far has identified opportunities for more innovation and choice.
“The targeted and proportionate actions we have set out today would enable UK app developers to remain at the forefront of global innovation while ensuring UK consumers receive a world-class experience.”
A final decision on both the designations will be made by October 22, the statement said. The regulator also published roadmaps on potential further action as part of these parallel investigations.
A strategic market status (SMS) designation allows the CMA to impose interventions on a firm, such as requiring it to adhere to specific behaviour so as not to undermine fair competition.
Both Apple and Google pushed back against the CMA’s proposals, with Google calling the step “disappointing and unwarranted.”
Google’s senior director for competition, Oliver Bethell, said.
“It is ... crucial that any new regulation is evidence-based, proportionate and does not become a roadblock to growth in the UK.”
Apple said separately it was concerned that the new rules being considered would undermine the privacy and security protections expected by its users.
"Path" for other convictions to be overturned
Lawyers representing Tom Hayes and Carlo Palombo believe other traders who were convicted of rigging the Libor and Euribor interest rates could consider appealing their convictions too.
Hayes’s lawyer, Karen Todner, tells reporters in London that she thinks they will all be taking advice over the course of the next couple of weeks to see if they can overturn their convictions.
Ben Rose, who represented Palombo, says he takes a “slightly more strident” position, explaining:
My initial impression is that the ruling today opens the door to those seven securing a route by which they can have their convictions overturned. I can’t obviously promise that to them, but I think… I can see a path.
Here’s a photo from today’s press conference:
Carlo Palombo, who is Italian, suggests that xenophobia and racism played a role in his conviction.
He tells the press conference that his opinion of the British legal system is that “it’s not very good, as an understatement”.
He says that most of the defendents brought to trial over rate-rigging accusations were acquitted, which prompted the SFO to only charge foreigners, explaining:
When we look at the people who actually were acquitted or convicted in our trials by jury, the vast majority of English accused were acquitted, whereas the vast majority of non-English accused were convicted.
All of the dark skinned one were convicted. And all our trials also happened at the same time as the Brexit problem.
Palombo says this created the idea that the case was about Europeans coming to England, stealing money from the English people.
Hayes: We had nothing to do with the financial crisis
Q: Would you describe yourself as scapegoats for the financial crisis?
Hayes says the term has been used about him and Palombo continually, insisting:
We had nothing to do with the financial crisis, like zero.
Hayes adds that he and Palombo were caught up in politics surrounding the financial crisis, and the desire for institutions and politicians for people to go to prison.
Tom Hayes then explains that he has dealt with “a lot of rage and anger and bitterness” in prison, and does not want to return to those emotions.
He then cited Nelson Mandela’s quote that anger is like drinking poison and thinking it is going to kill the other person [Mandela was talking about ‘resentment’, but the point stands!].
Hayes then reveals that he battles against anger every day, and tries to drop those emotions welling up.
And he cites Peter Sullivan, who had his murder conviction quashed in May after 38 years in prison, and said he was “not angry” and “not bitter”.
Hayes says:
If he can say that, then I can say that.
The compensation question...
Tom Hayes tells the press conference that he “very much doubts” whether he will receive any compensation for the time he spent in prison, due to changes made by former Justice Secretary Chris Grayling.
However, Conservative MP David Davis (who is chairing the press conference) says he raised the question of compensation arrangements with prime minister Keir Starmer, who said he’d look at it.
Asked what his plans are now, Hayes says he has been unable to plan any aspect of his life in the last 10 years.
He says he doesn’t know what he will do now, but that his main goal is to go and live close to the sea.
I don’t know where, but I’d like to be near a large body of water.
Tom Hayes’s lawyer, Karen Todner, criticises Mr Justice Cooke for presiding over “an unfair trial”, and suggested there could be a public inquiry into what went wrong.
“For that he must take responsibility,” she tells the press conference.
Todner also criticises the Serious Fraud Office and their representatives for failing “spectacularly” for not speaking up when the judge gave a direction that was wrong in law.
She adds there are “no winners here”, adding:
Tom has missed out on formative years with his son, time with his family, and the loss of his career and his home time he will never get back. The case highlights numerous problems with our criminal justice system, all of which I believe meet the criteria for a public inquiry.
Updated
Palombo: it's been a Kafkaesque nightmare
Former Barclays trader Carlo Palombo tells the press conference that he echoes Tom Hayes in thanking everyone who supported them over the last 10 years.
Palombo says he feels a mixture of relief and happiness after a “crazy experience”.
Palombo calls it a “Kafkaesque nightmare” in which he and Hayes were accused of “things that didn’t make any sense”, and been accused of being dishonest, greedy bankers.
He tells the press conference:
We’ve gone through a series of appeals and rulings that made absolutely no sense by people that are supposedly in charge of justice and the rule of law.
They completely disregarded the rule of law on the basis of trying to get people convicted on abstract moral charges.
Updated
Hayes thanks supporters at press conference
Tom Hayes and Carlo Palombo are holding a press conference now in Westminster, following the overturning of their convictions at the Supreme Court this morning.
Hayes speaks first, saying he feels “very blessed” and wants to thank the many people – some of whom he will never meet – who supported him.
Hayes explains that his first appeal to the Criminal Cases Review Commission was crowdfunded, including someone in the Philippines who put in $5.
Hayes says:
I’m never going to meet that person. If that’s you, let me know, and I’ll buy you a beer.
Hayes then thanks his lawyer, Karen Todner, who he says “really kept me going”, and his barristers, Adrian Derbyshire and Tom Doble, who he says “were just phenomenal at the Supreme Court”.
When asked whether he might seek financial compensation, Tom Hayes told the Guardian:
“I need to talk to my legal team about what civil remedies I might have, whether some money they took from me I might get back.
But really it’s not about money today...when you’ve lost your liberty and you’ve lost your money, you realise what’s really important to you, and it’s not your money.
The money’s just stuff. And family and friends, your liberty and your health, those are the things that are really important”
Libor (or the London interbank offered rate) and Euribor (the Euro interbank offered rate) were both pushed into the spotlight after the financial crisis.
Both rates were designed to show the average cost of borrowing, and were based on submissions from major banks who were trusted to accurately report how much they were being charged to borrow in the market.
The ‘Libor scandal’ blew up in 2012, when Barclays was fined £290m for its “serious, widespread” role in trying to manipulate Libor.
That exposed that some traders had attempted to manipulate the daily readings to benefit their own firm’s trading positions, in return for inducements such as bottles of Bollinger champagne.
In the crisis, Libor became a gauge of the health of a bank – as it showed whether other banks trusted it enough to lend money. The Bank of England faced accusations that it had instructed banks to enter low submissions into the Libor process, to avoid panic.
Caroline Greenwell, partner at international law firm Charles Russell Speechlys, suggests that other convictions over the issue of Libor could now be challenged.
According to the Serious Fraud Office, there were nine convictions of senior bankers for fraud offences, with two of these individuals pleading guilty and seven found guilty by juries.
Greenwell says Hayes and Palombo’s success could lead to other convictions being reviewed, explaining:
“This is a landmark ruling, by which the Supreme Court has made it clear that considering commercial interests when submitting LIBOR rates isn’t automatically dishonest or criminal.
“The judgment brings the UK in line with the US courts, who in 2022 overturned convictions of traders on the basis that banks were permitted to factor in trading advantages when making LIBOR submissions, and confirms that the juries in Mr Hayes’ and Mr Palombo’s trials were unfairly directed by the judge that considering commercial interests in the submissions were prohibited.
“This result not only clears Mr Hayes’ and Mr Palombo’s names, but could also lead to convictions secured in nine other criminal trials prosecuted by the Serious Fraud Office (who naturally opposed Hayes’ and Palombo’s appeals to the Supreme Court) being reviewed. Watch this space.”
Hayes: This feels very surreal
Tom Hayes and Carlo Palombo, and their supporters, are celebrating their victory outside the Supreme Court.
Speaking on the steps of the Court, Hayes says:
”I had 10 years to try and figure out what I was going to say at this moment….”
“It feels very surreal, a little bit like my conviction, like it’s not really happening to me. And I’m just very grateful to all the justices who heard the appeal.I’m very grateful to all the people who supported me, the strangers and friends alike and family, and I just want to say huge thank you to a legal team who’ve worked long hours for little money at times when other people wouldn’t.”
Photos: Before the verdict
SFO: Not in the public interest to seek a retrial
The Serious Fraud Office has said that it will not seek a retrial against Tom Hayes and Carlo Palombo.
Responding to today’s Supreme Court decision, the SFO say:
This judgment has determined that the legal directions given to the jury at the conclusion of trial were incorrect in Hayes’ and Palombo’s trials and for that reason their convictions have today been found unsafe.
We have considered this judgment and the full circumstances carefully and determined it would not be in the public interest for us to seek a retrial.
The Supreme Court cleared Hayes and Palombo after concluding that the juries had been misdirected by judges at their criminal trials.
In their ruling, the panel of judges say (via Bloomberg):
“Mr. Hayes was entitled to have his defense to the allegation that he agreed to procure false submissions as well as his denial that he had acted dishonestly left fairly to the jury
He was deprived of that opportunity by directions which were legally inaccurate and unfair.”
Carlo Palombo also cleared
A second trader convicted over interest rate rigging has also been cleared by the Supreme Court.
Carlo Palombo, a former Barclays trader who had been jailed for four years in 2019 for manipulating the Euribor benchmark, also had his conviction quashed today.
Tom Hayes wins appeal against Libor rigging conviction
Newsflash: City trader Tom Hayes has sensationally won his battle to clear his name after being convicted of rigging benchmark interest rates.
A panel of five justices at the UK Supreme Court has ruled that Hayes’s conviction was unsafe, ending a decade-long battle.
Hayes, who worked for UBS and Citigroup, served five-and-a-half years in prison for rigging Libor, a benchmark interest rate once used in the financial markets to underpin more than $350tn of loans and securities.
The court of appeal last year upheld the guilty verdict, saying there was “indisputable documentary evidence” that he had sought to move Libor.
But in 2022, a US court dismissed a criminal indictment against Hayes.
Libor was used to set the borrowing cost on contracts with notional values of hundreds of trillions of pounds.
Regulators found evidence that traders on a committee setting the rate every day had fixed it for their own benefit. Banks paid fines worth hundreds of millions of pounds.
Japan’s central bank has welcomed the trade deal agreed with the US last night.
Bank of Japan deputy governor Shinichi Uchida has said the agreement represents “very big progress” that reduces uncertainty over the economic outlook.
Given receding uncertainty surrounding trade negotiations, the likelihood of Japan sustainably achieving the central bank’s 2% inflation target has heightened, Uchida told a news conference.
An index that tracks Europe’s auto stocks is now up over 4%, and set for its biggest daily gain since early February, Reuters reports.
Away from the soaraway markets, accounting firm Deloitte is under investigation by the sector regulator over eight years of its audits into the FTSE 100 commodities and the mining company Glencore and a UK subsidiary.
The Financial Reporting Council (FRC) said it was looking into whether Deloitte’s audits of Glencore and its subsidiary Glencore Energy UK for the financial years ending 2013 to 2020 “gave sufficient consideration to the risk of non-compliance with laws and regulations”.
FTSE 100 still climbing
UPDATED: Stocks continue to push higher in London – the FTSE 100 has now nudged a fresh intraday record high of 9075.84 points, a gain of 52 points or 0.55%.
Victoria Scholar, head of investment at interactive investor, says:
“Risk-on sentiment drives European markets higher, with the CAC40 up over 1% following Asia into the green after Japan strikes a trade deal with the United States. As part of the agreement, tariffs on Japanese autos will be reduced to 15% from 25%, sending stocks in the auto sector sharply higher, lifting the Nikkei by over 3.5%.
French automakers like Stellantis and Renault are also trading sharply higher on the back of the deal. However Japanese 10-year bond yields surged to near 2008 crisis era highs as Prime Minister Shigeru Ishiba’s future appears uncertain.
After hitting a record close on Tuesday, the FTSE 100 continues its ascent.
Ishiba, incidentally, has now denied speculation that he could quit, insisting that media reports that he had already decided to resign were “completely unfounded.”
Updated
Deutsche Bank: Tariff risks remain...
The US-Japan trade deal has helped to ease investor fears that tariffs are about to snap back higher on 1 August, reports Jim Reid, market strategist at Deutshe Bank.
1 August is the latest in a series of deadlines set by Donald Trump for trade partners to reach deals, before higher tariffs kick in.
Reid adds, though, that trade war risks remain:
But of course, the threat of much higher tariffs still remains for several large economies, including the 30% on the EU, 35% on Canada and 50% on Brazil.
And there’s also the pledge of higher sectoral tariffs, including 50% 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.
We also know from experience that we might not know the outcome until hours before the deadline, which happened in early February where the 25% tariffs on Canada and Mexico were postponed for 30-days on the day before they were due to be implemented.
Shares in European car makers, and luxury firms, jump
Shares in European car manufacturers are roaring higher in early trading, as the US-Japan trade deal renews hopes that Brussels can reach an agreement with Washington DC.
Porsche (+7%), Mercedes-Benz (+5.5%) and Volkswagen (+5.5%) are leading the risers on Germany’s DAX share index.
In Paris, Stellantis (+5.3%) and Renault (+2.9%) are the top risers on the CAC 40 index.
Luxury goods makers are also in demand, such as fashion-to-champagne firm LVMH (+2.2%) and Kering (+2.8%), which owns brands including Yves Saint Laurent and Gucci.
The US-Japan trade agreement has “changed the mood” in the markets, says Kathleen Brooks, research director at XTB:
The Cac 40 is higher by more than 1%, as luxury companies and Airbus lead the index higher. These companies are most exposed to US tariffs and are reacting to any hint that tariffs could be milder than expected.
German car makers are also higher, as hopes rise for lower tariffs. BMW and Volkswagen are some of the top performers on the Eurostoxx 50 index, as hopes rise for Europe to achieve a similar deal to Japan especially on auto levies
Global markets are in a “buoyant mood” after the US and Japan secured a trade deal, reports Neil Wilson, UK investor strategist at Saxo Markets, adding:
It’s unclear right now if the positive news on the Japan trade deal means anything material for Europe striking a trade deal with the US – you would think that it does, and European stock markets are taking their clues from Japan this morning, rising sharply on the hope that the Japan deal means the EU is about to achieve the same.
After slipping 1% yesterday the DAX firmed up by the same margin to around 24,300, led by carmakers, while the CAC in France also rose more than 1% as luxury stocks were buoyed on the news, too.
European markets rally too
Stock markets have risen across Europe in early trading.
In Paris, the CAC 40 has gained almost 1.2%, while Germany’s DAX has risen by 0.8% in Frankfurt.
Italy’s FTSE MIB has gained 1.1%, and Spain’s IBEX is 0.5% higher.
FTSE 100 hits record high amid trade war relief
Boom! Britain’s main share index has hit a fresh record high, amid the market relief over the US-Japan trade deal.
The FTSE 100 share index has opened almost 0.5% higher, gaining 44 points to 9068 points, a fresh intraday high.
Firms exposed to tariff risks, including pharmaceuticals firms AstraZeneca (+1.7%) and GSK (+1.5%), and drinks maker Diageo (+1.6%) are aong the top risers.
It’s just a week since the ‘Footsie’ hit the 9,000 point for the first time. It has gained more than 10% so far this year, outpacing the US stock market.
A range of factors have pushed shares in London higher. Some investors have been diversifying away from Wall Street, while others have been seeking out sectors such as financial services and commodity-linked companies.
A boom in military spending has pushed up defence company stocks this year too.
Japan’s currency has also weakened a little today, despite the trade deal relief.
The yen has dipped by 0.2% today, to ¥146.9 to the dollar, amid the uncertainty over prime minister Shigeru Ishiba’s future.
Equity markets around the world are rallying following the US-Japan trade deal, on the view that deals reduce uncertainty.
— ING Economics (@ING_Economics) July 23, 2025
The yen, however, is less certain of what this all means – especially given the prospect of an imminent resignation from PM Ishiba. https://t.co/thEpJs4Ewu
Demand for long-dated Japanese bonds hits 14-year low on PM resignation fears
While shares are rallying, there’s more nervousness in the Japanese bond market after a disappointing debt auction today.
A sale of a Japanese 40-year government bond auction attracted the weakest demand since 2011.
The bid-to-cover ratio, a measure of demand, fell to 2.127, compared to 2.214 at the previous auction. That means today’s auction was still technically successful, as Tokyo received bids for twice as much debt as was available, but it also indicates weakening demand for Japan’s debt.
🇯🇵 #Japan 40-Year Bond Auction Sees Weakest Demand Ratio Since 2011 - Bloomberghttps://t.co/HLrafGoyrs pic.twitter.com/WwOWXXHd2H
— Christophe Barraud🛢🐳 (@C_Barraud) July 23, 2025
The auction came amid swirling speculation that prime minister Shigeru Ishiba could soon resign, despite nailing the US trade deal.
Ishiba’s position has been shaky since his coalition lost its upper house majority in elections last weekend.
Japan’s Mainichi newspaper has reported that Ishiba would announce his resignation as prime minister by the end of next month.
Updated
Both the Philippines and Indonesia also reached trade deals with the US yesterday.
The US president announced a new 19% tariff rate for goods from the Philippines on Tuesday, after a visit to the White House from Philippine president Ferdinand Marcos Jr. Trump said there would be no tariffs from the Philippines on US goods.
Later, the White House confirmed the same 19% tariff rate for Indonesia, down from an initial 32%, as it released terms of a deal reached last week that calls for Indonesia to eliminate tariff and non-tariff barriers on most US goods.
Japanese auto shares surge on tariff deal
Shares in Japan’s carmakers have soared, on relief that a trade deal with the US has been reached.
Japan’s prime minister Shigeru Ishiba revealed overnight that auto tariffs on Japanese cars will be cut to 15% under the agreement, without any quota on the number of imports.
Toyota’s share price has jumped by 14.5%, Honda are up 10.8%, Subaru rose by 16.8% and Mazda gained 17.75%.
Updated
Introduction: Stock markets cheer US-Japan trade deal
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Financial markets are cheering the news that Donald Trump has announced a trade deal with Japan.
Stocks are surging in Tokyo, where the Nikkei index has jumped by 3.75% and the wider Topix has rallied by 3.55%.
Other markets across Asia-Pacific are also higher, while the relief rally could drive Britain’s FTSE 100 to a new record high when trading begins.
Nikkei jumps and Yen gains as #Japan's assets enjoy relief from US trade agreement. The headline 15% reciprocal tariff is a considerable discount from the 25% in the letter earlier this month. Toyota shares rising as much as 10% after NHK reported the US would impose a tariff… pic.twitter.com/Mi24v5uME8
— Holger Zschaepitz (@Schuldensuehner) July 23, 2025
Under the deal, Japanese goods will incur a 15% tariff at the US border, below the 25% level which Trump had threatened to impose from 1 August earlier this month (but still above Trump’s ‘baseline’ tariff of 10%)
Announcing the deal, Trump declared on Truth Social:
We just completed a massive Deal with Japan, perhaps the largest Deal ever made. Japan will invest, at my direction, $550 Billion Dollars into the United States, which will receive 90% of the Profits. This Deal will create Hundreds of Thousands of Jobs — There has never been anything like it.
Perhaps most importantly, Japan will open their Country to Trade including Cars and Trucks, Rice and certain other Agricultural Products, and other things.
The breakthrough is lifting hopes that more countries will reach trade deals with the US, and avoid the hefty tariffs threatened by Trump
Tony Sycamore, market analyst at IG, explains:
While the details of the Japan trade deal are still limited and there may be some disagreement from the Japanese side, on face value, the deal announced this morning appears to be a positive outcome for markets overall, as it is well below the 25% level previously threatened.
Furthermore, this morning’s trade deal with Japan becomes the sixth US trade agreement in recent months, following deals with Britain, Vietnam, the Philippines, Indonesia, and China. US Treasury Secretary Scott Bessent is scheduled to meet with his Chinese counterpart next week to discuss extending the August 12 deadline for tariffs on Chinese imports. Reaching an agreement there would significantly help to defuse the impact and lessen the importance of the August 1 deadline.
Trade deal progress with the EU before the August 1 deadline would make the date a non-event.
The agenda
9.30am BST: Supreme Court to rule on appeal against LIBOR and EURIBOR convictions of Tom Hayes and Carlo Palombo
Noon BST: US weekly mortgage approvals data
3pm BST: US new home sales
