Nasdaq, S&P 500 close at record highs on US-Vietnam deal
The indices jumped on Wednesday as investors picked up a wide range of shares. However, the Dow Jones Industrial Average ended the day 10 points lower than Tuesday's close.
Many investors cheered US President Donald Trump's announcement of a deal with Vietnam. It boosted expectations of more agreements between Washington and other trading partners.
But not everyone shared the optimism amid reports that Japan is having a tough time advancing the talks.
The uncertainty, combined with a stronger yen, weighed on Tokyo's Nikkei 225 in Thursday trading. It edged higher at the open, but held to a tight range around Wednesday's close.
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Japan Times
an hour ago
- Japan Times
Japan's 2025 wage talks conclude with highest gain in 34 years
Japan's annual wage negotiations concluded with the largest pay increase in 34 years, according to the final tally released by the country's biggest labor union group, an outcome that supports the central bank's view that a cycle of higher wages and prices is emerging. Workers at 5,162 companies affiliated with Rengo secured an average wage increase of 5.25% in this year's negotiations, according to the final update of pay deals announced by the trade union federation on Thursday. While the figure came in lower than the preliminary 5.46% reported in March, it still marks the highest growth rate since 1991. Rengo represents approximately 7 million workers, or around 10% of Japan's labor force. Robust wage gains help back the case for the Bank of Japan to raise interest rates further, as the central bank weighs the appropriate timing of its next move amid global economic uncertainty. Gov. Kazuo Ueda has recently signaled a cautious stance due to a lack of clarity over U.S. President Donald Trump's trade policies, emphasizing the need to closely monitor data. The central bank's nine-member policy board is scheduled to deliver its next decision at the end of the month, with markets broadly expecting rates to remain unchanged at 0.5%. Thursday's report showed that workers at smaller firms achieved a wage increase of 4.65%, up from 4.45% in the corresponding tally last year. The gain was the largest in 33 years, and the wage gap with larger counterparts narrowed to 0.6 percentage points, compared to a 0.65 percentage point difference last year. For 2025 talks, Rengo focused on boosting pay at smaller enterprises, setting a 6% wage hike target for them, higher than the 5% overall goal. In Japan, nearly 70% of employees work for small and mid-sized firms, making their pay increases critical to national wage trends. Despite historic nominal wage gains, rising prices continue to erode purchasing power. The nation's key inflation gauge has stayed at or above the BOJ's 2% target for three years, meaning that real wages only grew during four months within that period. Persistent inflationary pressures have also dampened consumption, gradually eating into corporate profit margins and limiting businesses' ability to raise wages. That could disrupt the virtuous cycle of wage and price increases that policymakers are aiming for. Ahead of the upcoming national election later this month, Prime Minister Shigeru Ishiba's administration has pledged policy support to address both inflation and sustained wage growth. To ease the burden of rising prices, the ruling party announced a ¥20,000 ($139) cash handout per adult, with additional support for households with children. On the wage side, it promised support for labor-saving capital investment, setting a target to raise average annual wages by ¥1 million per person by fiscal year 2030. As a counterproposal, opposition parties, including the Rengo-backed Constitutional Democratic Party and Democratic Party for the People, are advocating for a temporary cut to the consumption tax. Looking ahead, Japan's economic momentum is at risk from the U.S. tariffs. Exporters, who have benefited from a weak yen in recent years, are beginning to scale back shipments and production in response to tariff pressures. Despite months of negotiations, Tokyo has yet to finalize a trade deal with Washington. Japan continues to push for a comprehensive agreement that addresses sector-specific duties, especially those impacting the auto industry. Without progress, baseline tariffs on Japanese exports to the U.S. could revert to 24% or even higher from the current 10% next week. The BOJ has also expressed caution over the wage trend in its latest outlook report, particularly for large manufacturers that tend to set the tone for broader wage trends.
Japan Times
an hour ago
- Japan Times
Vietnam steals a march and leaves Japan in a tough spot on U.S. tariffs
A tariff deal negotiated between the United States and Vietnam has set a high bar for Japan, which has made no concrete progress over 11 weeks of intense trade talks with Washington and has earned itself the ire of U.S. President Donald Trump in the process. 'Even after a round of negotiations like this, it's clear that some tariffs will remain,' said Akihiko Yasui, research director at Mizuho Research and Technologies, in discussing the Vietnam deal. 'And more importantly, it was the higher-rate tariffs that were in fact on the table.' In a Truth Social post on Wednesday, Trump said a 20% tariff will be imposed on Vietnamese exports to the U.S., lower than the original 46% "reciprocal" tariff announced on April 4. Goods transshipped to the U.S. via Vietnam will be subject to a 40% levy. American exports to Vietnam will be allowed to enter the country duty-free. 'It will be a great deal of cooperation between our two countries,' Trump wrote. Japan has all along insisted that tariffs introduced by the Trump administration be rolled back as a precondition to a deal. The U.S. has countered that the only subject up for negotiation is the reciprocal tariffs, now at 10% but set to rise to 24% for Japan on July 9. The Vietnam deal confirmed that the U.S. stance hasn't changed and that a wide gap remains between the positions of Japan, which has yet to make any major concessions, and the U.S., which is demanding big concessions in exchange for a lowering of the higher reciprocal rate. 'In Japan's case, there's very little that the U.S. can point to and say, 'We won this.' That makes the situation quite difficult for Japan,' said Yasui. 'Japan doesn't have much to concede, and even what we could get in return doesn't strike at the core of our interests.' The United States has reported two other trade deals, one with the United Kingdom and the other with China, but they were quite unique and of limited value in gauging the stance U.S. negotiators would take with other countries. The U.K. runs a trade deficit with the U.S., while the China deal involved a number of special considerations, not the least of which is the country's lock on certain rare earths. Vietnam's position is closer to that of many other countries still in talks with the U.S., including Japan. It has a huge trade surplus with the U.S., has been accused of using nontariff barriers and has no ace to play in negotiations. Trade officials in the United States remain optimistic but guarded and vague when discussing talks with Japan. In a CNBC interview on Wednesday, U.S. Deputy Treasury Secretary Michael Faulkender said that the U.S. anticipates making announcements on the negotiations with some other countries before the July 9 deadline. 'Japan is among those that we have had a number of conversations,' Faulkender said. 'We continue to make good progress with them and hope to have an announcement shortly on the progress that we have made.' He also said that if countries move to address nontariff barriers, that could 'change the calculus for us on where our tariff barrier ends up.' Trump himself has been signaling more of a hard line. He personally slammed Japan for three days running this week, saying that it's "spoiled" and complaining about its unwillingness to accept U.S. vehicles and rice. On Tuesday, he said that tariffs on Japanese imports could be taken as high as 35%. The United States might demand a cap on the number of Japanese vehicles exported to the United States if no deal can be reached soon, according to a Wall Street Journal article on Wednesday. Japan has remained silent regarding Trump's verbal onslaught and has stuck to its talking points. On Tuesday, Prime Minister Shigeru Ishiba reiterated in three different settings that Japan sees investment in the United States as the best way to address its trade surplus with the country. The Trump administration has placed an additional 25% tariff on vehicles and auto parts and a 50% tariff on steel and aluminum, and the 10% baseline reciprocal tariff on most other goods. The ball is in Japan's court now, Yasui said. But the U.S. demands require Japan to make concessions that are nearly politically impossible. 'Trump has been dropping hints — about rice, for example. But if Japan's position is, 'We have elections, we can't touch rice,' or 'We can't use agriculture to save auto exports,' then that basically means we're out of ammo,' Yasui said. 'This really is a political judgment,' he went on. 'It is not that Japan can't do anything. The issue is whether Japan chooses to make such decisions or prepares itself for a long-term standoff.'
The Mainichi
2 hours ago
- The Mainichi
Tokyo stocks end slightly higher amid caution over US jobs data
TOKYO (Kyodo) -- Tokyo stocks ended slightly higher Thursday after directionless trading as many investors took to the sidelines ahead of the release of U.S. jobs data. The 225-issue Nikkei Stock Average ended up 23.42 points, or 0.06 percent, from Wednesday at 39,785.90. The broader Topix index finished 2.95 points, or 0.10 percent, higher at 2,828.99. On the top-tier Prime Market, gainers were led by iron and steel, nonferrous metal and transportation equipment issues. The U.S. dollar briefly declined to around the mid-143 yen line in Tokyo as investors grew cautious ahead of the release of key U.S. jobs data later in the day after U.S. employment data from payroll processor ADP turned out weaker than expected, raising uncertainty about the world's largest economy. But the U.S. currency later rebounded to the upper 143 yen zone, as the Japanese currency was sold on eased expectations for an early interest rate hike by the Bank of Japan after Hajime Takata, its hawkish member, said the central bank is pausing to raise the rate for now, dealers said. Stocks moved in and out of positive territory as investors grew wary of taking bold positions after the ADP report for June showed that private payrolls unexpectedly fell for the first time in about two years, brokers said. "Investors who have so far perceived the labor market is solid are focused on whether they can maintain the view" when the U.S. jobs data for June comes out, said Maki Sawada, a strategist at the Investment Content Department of Nomura Securities Co. The market found some support from buying of heavyweight semiconductor-related issues following an overnight advance by the tech-heavy U.S. Nasdaq index. However, persistent worries about tariff negotiations dampened sentiment, with a Japan-U.S. trade deal looking uncertain after other countries already reached agreements with Washington.
