US President Donald Trump announced a Japan tariff deal with reciprocal tariffs set at 15%, reducing the 25% tariff for Japanese automakers. The Nikkei 225 rose 3.5%, with Toyota shares jumping over 14%.

The deal improves the risk outlook for Japanese stocks, as tariffs are now at a 15% rate, benefiting automakers like Toyota, Nissan, and Honda. The reduction from 25% to 15% for Japanese automakers will boost profits for these companies.

Japanese equities are attractively priced, with around a 10% discount to fair value estimates. The auto industry may still face negative tariff impacts, but Toyota remains the preferred Japanese automaker. The key risk remains the indirect impact of slower global demand due to ongoing tariff uncertainty.

Read more at Morningstar: Toyota Leads Japan Stocks Higher on US Tariff Deal