Trump rally fades as Japanese investors brace for central bank decision and earnings season

According to Jinse Finance, the unexpected trade agreement between the US and Japan has triggered significant market volatility, driving Japanese stocks to record highs and sparking a wave of government bond sell-offs. However, after the initial euphoria, investors are reassessing domestic risks. “The agreement brought a huge sense of relief, but now the market is saying: hold on, don’t celebrate too soon,” said Vishnu Varathan, Head of Economics and Strategy at Mizuho Bank. Attention is now shifting to key events in the coming days, which may reveal the trajectory of Japanese stocks that have underperformed their regional peers this year. Although the Bank of Japan is widely expected to keep interest rates unchanged at next Thursday’s policy meeting, any hint of a possible rate hike in September could impact both the stock and bond markets. Investors are also closely watching the earnings reports of companies such as Fujitsu, Tokyo Electron, and Nissan Motor. While these results will not yet reflect the effects of the trade agreement, they can reveal the true resilience of these firms in a prolonged high-tariff environment—even if the outlook is already more optimistic than the worst-case scenario.