Asian Stocks Fluctuate on Hints of Tariff Relief
Stocks remained volatile in Asia after U.S. Commerce Secretary Howard Lutnick suggested the Trump administration may lift some tariffs that have sparked a global selloff in markets.
Equities opened lower in Sydney and mixed in Tokyo after a chaotic Tuesday that left global indexes near levels seen earlier this year. Futures for the S&P 500 rose 0.8% — after the index fell 1.2% on Tuesday — echoing gains in late trade after Lutnick hinted at a compromise with Canada and Mexico. That came hours after the U.S. imposed the largest new set of tariffs in nearly a century on goods from its neighbors and China.
Panic gripped markets throughout Tuesday, as sentiment shifted rapidly amid uncertainty over President Donald Trump’s trade war and Germany’s abandonment of fiscal shackles to revamp Europe’s defenses. The changes in the U.S. — ahead of his speech Tuesday night to Congress — signal a new phase in Trump’s economic and diplomatic expansion to reshape America’s position in the world.
"It's still very unclear how long these tariffs will be in place," said Clark Geranen, chief market strategist at CalBay Investments. "We tend to believe that this is more of a negotiating tactic and not the beginning of a long, drawn-out trade war. But in this situation, investors are selling first and asking questions later."
China set its economic growth target at around 5% for 2025. The country widened its budget deficit to a 30-year high, as it battles deflation, falling property prices and now a trade war with the U.S. Policymakers also set an inflation target of 2%, down from the long-held 3% target. The yuan weakened slightly on the announcement.
The Nasdaq 100 fell 0.4% on Tuesday. China's U.S.-listed stock index rose 2%, as Beijing's response to the tariffs remained unclear and traders awaited the annual National People's Congress.
The yield on the benchmark 10-year U.S. Treasury note fell on Wednesday. The dollar gauge fell for a third day.
The U.S. could announce a path to tariff relief on Mexican and Canadian goods covered by the North American free trade agreement as early as Wednesday, Lutnick told Fox Business. He added that tariffs would likely fall “somewhere in the middle,” with Trump “moving along with Canada and Mexico, but not all the way.”
In European news, Germany said it would unlock hundreds of billions of euros for defense and infrastructure investment in a dramatic shift that upends its tight controls on government borrowing. The euro slipped against the dollar after rising more than 1% in each of the last two sessions. If Wall Street has learned one thing during Trump’s first term as president, it’s that the stock market is how he keeps score. The theory is that the president’s penchant for using equities as a report card means any policy that shakes up the market will cause him to revise his plans. But with stocks plunging, investment professionals are starting to wonder if there’s a “Trump Put.”
“Where’s the Trump Put?,” says Tom Essaye at The Sevens Report. "At what level of stock market 'distress' would Trump and his administration reverse course? Obviously, we don't know the exact numbers, but if we look back at Trade War 1.0, history suggests that the 'Trump Put' would have picked a decline of about 10% in the S&P 500."
Source: Bloomberg
