(Bloomberg) — Stock markets staged a relief rally after US Commerce Secretary Howard Lutnick said the Trump administration may walk back some tariffs. Hong Kong shares led the gains as China’s economic growth target spurred bets of more stimulus.
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Traders are wading through a slew of news, with Beijing’s annual work report, Lutnick’s hints of a tariff compromise with Canada and Mexico, and Germany’s plan to boost defense spending all impacting markets. Both US and European equity-index futures gained as President Donald Trump defended his economic plans, while a regional Asian gauge rebounded. Treasuries held Tuesday’s declines and the dollar strengthened against all the Group-of-10 currencies.
Chinese shares in Hong Kong outperformed after the National People’s Congress in Beijing set an economic growth target of about 5% for 2025, a third straight year it has maintained that goal. Given the broadening global uncertainty on tariffs and geopolitics, economists expect Chinese officials to add stimulus.
“There’s nothing to nitpick, just a robust growth target, and a clear intention to support the economy,” said Vey-Sern Ling, managing director at Union Bancaire Privee. “They’re saying all the right things on employment, housing market, stock market.”
Frantic moves lashed markets all day Tuesday, as sentiment shifted quickly amid the slew of news. US stocks were particularly volatile, first plunging, then recovering, and falling anew at session’s end. While the S&P 500 closed down 1.2%, equities gained in late trading after Lutnick’s comments.
In his address to Congress, Trump acknowledged that there may be an “adjustment period” to tariffs as he defended his policies to remake the US economy. He also called for an end to a $52 billion semiconductor subsidy program and repeated the 25% tariffs for aluminum, copper and steel.
Read: Trump Warns of Tariff ‘Disturbance’ as He Touts Trade Plans
“There’ll be a little disturbance, but we’re okay with that,” he said. “It won’t be much.”
His speech comes as the latest data show economic activities slowing amid the uncertainties of a global trade war. The Aussie extended its drop and the won erased its gain after Trump spoke.
The US could announce a pathway for tariff relief on Mexican and Canadian goods covered by North America’s free trade agreement as soon as Wednesday, Lutnick told Fox Business. He added that tariffs would likely land “somewhere in the middle,” with Trump “moving with the Canadians and Mexicans, but not all the way.”