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 gains as China’s economic growth target spurs bets of more stimulus.

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, while a regional Asian gauge rebounded from early losses. Treasuries held Tuesday’s losses.

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 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 uncertainty around President Donald Trump’s trade war and Germany abandoning fiscal shackles to transform Europe’s defenses. The swings in the US mark a new phase in Trump’s broadening economic and diplomatic reset of America’s place in the world. 

“The market seems to be pricing in the idea that the Trump administration is seeking a deal, rather than focusing on the potential inflationary impact of additional tariffs for the US,” said Tomo Kinoshita, global market strategist at Invesco Asset Management.

In the same report, China boosted its budget deficit to the highest in 30 years, as it battles deflation, a property crash and now a trade war with the US. Policy makers also set an inflation goal of 2%, down from a longstanding 3% target. The yuan weakened slightly on the announcements.

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.”

In European news, Germany said it will unlock hundreds of billions of euros for defense and infrastructure investments in a dramatic shift that upends its ironclad controls on government borrowing. The move drove the euro to a three-month high and sparked a selloff in global bond markets to bund futures to Treasuries.

In commodities, oil extended its decline and gold edged lower after gaining in the previous session.

Key Events This Week:

  • China Caixin services PMI, Wednesday

  • Eurozone HCOB services PMI, PPI, Wednesday

  • US ADP employment, ISM services index, factory orders, Wednesday

  • Fed’s Beige Book, Wednesday

  • Eurozone retail sales, ECB rate decision, Thursday

  • US trade, initial jobless claims, wholesale inventories, Thursday

  • US Treasury Secretary Scott Bessent speaks, Thursday

  • Fed’s Christopher Waller and Raphael Bostic speak, Thursday

  • Eurozone GDP, Friday

  • US jobs report, Friday

  • Fed Chair Jerome Powell gives keynote speech at an event in New York hosted by University of Chicago Booth School of Business, Friday

  • Fed’s John Williams, Michelle Bowman and Adriana Kugler speak, Friday

Some Of The Main Moves In Markets:

Stocks

  • S&P 500 futures rose 0.4% as of 11:19 a.m. Tokyo time

  • Japan’s Topix was little changed

  • Australia’s S&P/ASX 200 fell 1.1%

  • Hong Kong’s Hang Seng rose 1.5%

  • The Shanghai Composite fell 0.1%

  • Euro Stoxx 50 futures rose 1.5%

Currencies

  • The Bloomberg Dollar Spot Index was little changed

  • The euro fell 0.2% to $1.0610

  • The Japanese yen was little changed at 149.83 per dollar

  • The offshore yuan fell 0.3% to 7.2719 per dollar

Cryptocurrencies

  • Bitcoin fell 0.5% to $87,093.26

  • Ether fell 0.3% to $2,172

Bonds

  • The yield on 10-year Treasuries was little changed at 4.25%

  • Australia’s 10-year yield advanced 10 basis points to 4.37%

Commodities

  • West Texas Intermediate crude fell 0.7% to $67.80 a barrel

  • Spot gold fell 0.1% to $2,914.17 an ounce

This story was produced with the assistance of Bloomberg Automation.

© 2025 Bloomberg L.P.

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